Neo Financial vs EQ Bank: Which one should you choose?
Neo Financial and EQ Bank are two of the best online banks in Canada. With the cost of living still a hot-button issue, we can’t escape the headlines or hellish prices. But these two Canadian fintech trailblazers are helping Canucks stay afloat in challenging times – and giving the Big Six a run for their money. Let’s dive into a detailed comparison of Neo Financial vs EQ Bank to help you decide where to park your pennies. From feeless banking to high interest on savings and generous cash back perks, we size em’ up.
About Neo Financial
From SkipTheDish to skip the fees, Neo Financial is the new online bank brought to us by the creators of our favourite food delivery app. Since launching one of the best cash back credit cards in 2019, they’ve expanded their financial services to include a high-interest money account, cash back prepaid Mastercard, and an extensive network of retail partners offering the highest bonus cash back rates in Canada.
In step with its digital peers, Neo Financial also offers a credit card lineup, mortgage marketplace, and investing platform. They’ve partnered with CDIC member institutions like Concentra Bank to protect your eligible deposits. Security features like biometrics and 2-factor authentication (2FA) help to keep sticky fingers off your wealth.
About EQ Bank
Since launching in 2016, EQ Bank has blossomed into a top-tier digital bank in Canada. Bidding adieu to physical branches, they’ve slashed overhead expenses and passed the savings onto us. With competitive rates, no monthly fees, and an intuitive mobile app, EQ Bank was among the first to bring adulting into the digital age.
They recently introduced the new cash back EQ Bank Card, giving you value-added instant access to your cash. Other financial solutions include a mortgage marketplace, GICs, and USD accounts to name a few. And just like Canada’s Big Six banks, EQ offers the same bank-level protection you’re accustomed to with CDIC insurance on your eligible deposits.
Daily banking: Neo Financial vs EQ Bank
Neo Financial offers a single high-interest hybrid account called Neo Money. It combines the perks of a savings account with the features of a chequing account. It’s free with no monthly fees and offers free unlimited transactions for most of your day-to-day needs, such as:
Upon opening an account, you can request your free Neo Money Card. It’s a prepaid Mastercard linked to your Neo Money account that gives you instant access to your cash.
Does Neo offer joint accounts? No. At the time of writing, Neo Financial does not offer joint accounts for users.
EQ Bank also offers a high-interest hybrid account called the EQ Savings Plus account. Like Neo, it combines the functions of a daily chequing account with an interest rate typically reserved for traditional savings accounts. The account is free with no monthly fees and offers unlimited daily transactions for free, like:
Like Neo Financial, you have to request your free EQ Bank Card upon opening your account. It’s also a prepaid Mastercard that provides instant access to your cash. Unlike Neo Financial, the card is not linked to your EQ Savings Plus Account. To use the card, you need to load it by transferring money to the card account.
Unlike Neo Financial, EQ Bank offers various other account types such as:
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Can I order cheques from Neo or EQ?
No. At the time of writing, neither Neo Financial nor EQ Bank offer cheques drawn on their respective accounts.
Who has the better savings interest rate?
EQ Bank wins this battle with 2.50% interest on deposits, edging out Neo Financial’s lower 1% rate. Both EQ and Neo calculate your interest daily on the total closing balance and deposit the earnings into your account monthly.
Neither of them require a minimum balance to earn interest. Having said that, rates are subject to change anytime and without notice.
Earning cash back with Neo Financial vs EQ Bank
Neo Financial and EQ Bank both offer cash back rewards on everyday purchases. One is the obvious winner with a tailored cash back system based on spending habits, while the other focuses primarily on maximizing interest on deposits.
Neo Money Card
The Neo Money Card is a prepaid Mastercard linked directly to your Neo Money account – no need to load it by moving money around. You can use it anywhere Mastercard is accepted for in-store, online, and foreign purchases. Cash withdrawals are available through Mastercard-supported ATMs.
This is where Neo Financial mops the floor with EQ Bank, and most cash back cards for that matter. You are guaranteed to earn a minimum of 0.5% cash back on all card purchases, but the average cash back rate is actually 5% for most users. Neo offers a unique guarantee that if your average monthly cash back rate falls below the 0.5% minimum, they’ll top you up.
Not only that, but Neo has partnered with over 10,000 businesses across Canada to offer big bonus cash back rewards. You can earn up to 15% cash back for each first purchase at participating partner merchants. Neo partners are constantly offering bonus offers, making it one of the best prepaid cards in Canada.
And one thing about Neo that doesn’t get the appreciation it deserves – it supports small local businesses. From the app, you can find local gems near you, which is exactly how I recently discovered my new favourite restaurant in Winnipeg and I earn 3% cash back every time I eat there.
EQ Bank Card
Even though the EQ Bank Card earns cash back on purchases too, it just can’t compete with all the free money Neo throws at you. All card purchases earn the same 0.5% cash back rate, with no opportunities for bonus rewards. Nor does EQ Bank offer any accelerated cash back purchase categories common with other cash back cards, nor are they partnered with any businesses.
Having said that, the EQ Bank Card does offer two unique value propositions that most others don’t – free withdrawals from any ATM in Canada and no foreign transaction fees. They’ll even reimburse you the fees charged by ATM service providers.
One annoying downside to be aware of – the EQ Bank Card is not linked directly to your Savings Plus Account. To use the card, you need to pre-load it by transferring money into its separate holding account. I figured this out the hard way when I tried to use it in North Dakota and it kept declining. I had to use my backup card that charged me foreign transaction fees.
This article is the shortened version of an article originally published on Hardbacon.ca by Heidi Unrau under the title "Neo Financial vs EQ Bank: A Deep Dive to Help You Decide".