Online Banks vs Brick and Mortar Banks

Ask yourself:

Do you know how much you are paying your bank in service charges?

The average bank charges $15 a month in service charges. That does not include the $1.50 fee for e-Transfers. So, if you made two e-Transfers a month, you would be paying $18 a month in service charges. I am 45 and an adult (kids don’t get charged SC nor do students and over 60’s)… So, I’ve been paying service charges for about 26 years—since I was 19. E-Transfers started in 2002, so let’s just say $15 a month for 26 years… I paid the banks $4680.


Now let’s step back a bit. From what I know, when we put our money in a bank, they give us maybe 1% interest (that’s generous) The bank takes the money in our account and invests it and they get about 7-20% on that money. And they charge us service charges so they can invest our money. Something is terribly wrong here.

What do you get from a brick-and-mortar bank anyway?

  • A teller to talk to.

  • They try to sell you investments.

  • You can open a business account (Online banks can't do that yet)

  • They do a fair bit of financial literacy (more than any school does).

  • You can pay many bills and taxes at the bank.

  • They also contribute to the communities: e.g., LGBTQ, cancer research, community support etc. That’s cool!

  • They employ a lot of people.

  • They buy big buildings and own a lot of real estate.

I have banked with an online bank for over 24 years. I have saved over $4000 plus so much more. Here are the details:

  • The bank I use gives me 2.5% on all the money I deposit into a savings account.

  • I can have as many checking and savings accounts that I want. I don’t need to have a certain balance in them either.

  • NO SERVICE CHARGES AT ALL!!!

  • I can’t pay my business GST online through my online bank just yet. I have to mail in a check or go to a bank that has a physical location to pay it.

  • There are no lineups, and I can use the CIBC bank machine with no charges.

  • I have free e-Transfers and unlimited checks (I rarely use checks anymore).

  • For some of my clients having a “real” bank feels safe for some reason. It is a psychological thing.

  • Setting up your online banking system can be a headache—it takes a bit of time—but in the long run, wouldn’t you want that $4000 in your pocket?

Now, I do have to say that the banks do some things that I am totally in support of. They support things in our community like fundraisers for charities, LGBTQ events, and more. They employ amazing people who do education and outreach to the community; they provide financial literacy to those who may have never understood how investments work … or mortgages or TSFAs. It is all important stuff. But service charges? Come on! That’s not okay. And $1.50 for an e-Transfer that really doesn’t cost them anything? Why? It’s all digital.


I also have a strong opinion of some of the brick-and-mortar banks not having very user- friendly online platforms—ones that make it easy for us to bank better and understand what’s going on with our money. That should be top of the list for customer service in this day and age, especially because fewer and fewer of us actually go to the bank to bank anymore.


Since online banks are the wave of the future, I wonder what innovations an online bank could step into now. Perhaps they could do more community outreach or have a way to support the community in a way that aligns with the bank’s values. What would an online bank with an environmental value look like? Hmm, perhaps that is the next wave.

There is part of me that wants to name the banks in Canada that need to give their systems an overhaul … to give a shout out to the ones that are pushing the edge and perhaps point you in the direction of the best online banking system right now.

Stay tuned! My next blog may showcase my blatant opinions.


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