Welcome to my post on no fee banking Tangerine vs Simplii Financial updated for 2018. I want to say upfront that I think both banks offer a lot of value and that I use both of them for my banking. I’m a huge fan of no fee banking because I don’t believe in the insane practice of paying fees to access my own money! While a growing number of competitors are entering the no fee banking space, there’s no question that, in Canada, the 2 dominant players are Tangerine (formerly ING Direct) and Simplii Financial (formerly PC financial). In this post I compare the two.
Please note: this page contains affiliate links. As an affiliate of Tangerine, this blog receives a small commission for each sign up.
No Fee Banking Tangerine vs Simplii Financial
Both banks are similar in that each is affiliated with one of Canada’s Big 5 banks. Tangerine Bank was created when Scotiabank bought ING Direct Canada in 2012. Simplii Financial evolved from PC financial which had been around for over a decade. It is run by CIBC’s direct banking division.
What I like about Tangerine is the $50 sign-up bonus and the referrer program. If you’d like to open one, then visit the Tangerine website and remember to use the Orange Key More25 to get $50 in free bonus cash just for opening up an account!
In contrast, Simplii Financial doesn’t offer bonus referral program.
Comparing Banking Services Tangerine vs Simpii Financial
First off, I have to say that both banks offer a full menu of banking services – everything from chequing and savings accounts to mortgages, credit cards and investments. One point to note is that all banking is done online or over the phone. So if you’re someone who needs handle banking face-to-face with a bank teller then neither of these banks would be a good fit for you.
Most people shy away from these banks because they think that it will be hard to access their money. I haven’t really had that problem though because I handle virtually all my finances online. Also, if need be, I can transfer my money from Tangerine or Simplii Financial to another, full service, banking institution. And of course you can access your money at automated banking machines. For Simplii Financial, there are bank machines inside Loblaw’s stores or you can use CIBC bank machines. Tangerine customers can use bank machines through the Scotiabank network.
Bank Account Offerings at Tangerine and Simplii Financial
Both banks offer savings and chequing accounts with similar interest rates. For example, both banks pay 1% on balances for savings accounts. For chequing, Tangerine pays 0.25% while Simplii Financial pays 0.05%.
Other Accounts: RRSPs, TFSAs and RESPs
Both banks offer registered accounts such as RRSPs, TFSAs and RESPs.
Mortgages
For most people, their biggest expense is the monthly mortgage payment so it’s really important to get best deal possible. Both companies offer a variety of ways to make extra payments – which is key to paying your mortgage off faster. Beyond their similar prepayment features, when it comes to mortgages there are significant differences between Tangerine and Simplii Financial in two very important areas.
First, Simplii Financial offers Conventional Mortgages. A conventional mortgage simply means that the amount owed is what’s registered against the property. For example, if a person bought a house for $300k, put down $100k and took a mortgage for $200k – all that’s registered against the property is $200k.
Tangerine, on the other hand, offers only Collateral Mortgages. A collateral mortgage means that the amount that is registered against the property could be full amount of the property’s value. So for example, a person buys that same $300k house, puts down $100k and takes a mortgage for $200k – the amount that’s registered against the property could be as much as $300k. The reason Tangerine does this is that it makes things easier in the event that a person wants to borrow more money or refinance the property to take advantage of an increase in home equity.
The second major difference is the interest rates offered by the banks. Simply put, as of November 2017, Tangerine has better rates. For example, on a 5-year fixed the rate at Tangerine is 3.19% while Simplii Financial offers a special 5-year fixed at 4.54%. The difference between the 2 rates is about $248 a month on a mortgage balance of $300,000! That’s quite a big difference.
My personal preference is for a conventional mortgage – if I want more money I’ll look for a line of credit. But I also need to be getting the best interest rate…this is what saves me money so I think Tangerine mortgage rates can’t be beat. So when it comes to mortgages I think that Tangerine is now the clear winner here. This is definitely an area where Simplii Financial needs to become more competitive because most people tend to bank where their mortgage is.
Investments
Now for my favorite topic of discussion…investments. It’s fair to say that both banks offer a fairly limited choice when it comes to real investments.
Tangerine offers its own, “in-house,” menu of mutual funds. They offer 4 choices that are a combination of balanced and index fund portfolios. With MERs running at 1.07%, they aren’t exactly low-cost, but they’re not super expensive either.
Simplii Financial offers a much larger mutual fund selection through CIBC. Some of the index funds have similar MERs to the Tangerine mutual fund portfolios, but I think paying even 1% for an index fund is outrageous when TD offers e-series funds for much less (about 0.30%) and exchange-traded funds (ETFs) are even cheaper than that. Think investment costs don’t matter because the amount is only a difference of 0.70% then check out my article on the danger of mutual fund fees.
It’s worth noting here that Tangerine offers index portfolios which are an all in one type of deal. Simplii Financial offers stand-alone index funds or index portfolios. Sadly, I couldn’t find MERs for the index portfolios only on their index funds so it’s hard to do a pure apple to apple comparison here.
Overall, I’d have to say that I like Tangerine’s mutual fund portfolio offerings. In fact I wrote a piece on Balanced Funds that featured one of their products in comparison to others. The Tangerine mutual fund portfolio offerings are basic for sure, but for those with little or no experience or interest in investing they’re not bad at all.
Simplii Financial offers more choice but I don’t like that you have to leave Simplii Financial and deal with CIBC directly with the mutual fund investments. Also, I don’t feel like the mutual funds offered by Simplii Financial are truly low-cost options at all considering that TD e-series funds can be purchased at a fraction of the costs.
Cash Back Credit Cards
As of this writing, only Tangerine offers a special rewards credit card to its customers.
The Tangerine Money-Back Credit Card is the only no-fee MasterCard offered by Tangerine Bank.
Here are some of its key features:
1. No annual fee
2. 2 % cash back from your choice of 2 of 10 categories, including groceries and gas.
3. If a person opts to have the cash back deposited into a Tangerine Savings Account instead of having it applied directly to any outstanding balances, a 3rd category for the 2% cash back becomes available.
4. 0.50% cash back on everything else.
5. Interest rate on purchases and cash advances is 19.95%
For more on the Tangerine Money-Back Credit Card check out my Review HERE.
Overall, I’d say that Tangerine offers its customers superior value. Maybe down the road Simplii will enhance its services by offering money back credit card and other things to more directly compete with Tangerine. Thanks for reading my post on No Fee Banking Tangerine vs Simplii Financial.
Check out my other article on the Best No Fee Cash Rewards Credit Cards
Image credit: Photo by Mister GC / FreeDigitalPhotos.net