Neo Financial vs EQ Bank: A Deep Dive to Help You Decide

Neo Financial vs EQ Bank

    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, and ATB to issue Mastercards. 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

    [Offer productType=”SavingsAccount” api_id=”60fee79313fd2f260ff90749″ id=”173809″]

    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: 

    • Card purchases 
    • Direct deposits
    • Bill payments 
    • eTransfers
    • Pre-authorized debits (PADs) 
    • Electronic Funds Transfers (ETFs) between financial institutions

    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.

    [Offer productType=”CreditCard” api_id=”63d2cb6a18196b6d2e1928c2″ id=”198047″]

    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: 

    • Card purchases 
    • Direct deposits
    • Bill payments 
    • eTransfers
    • Pre-authorized debits (PADs) 
    • Electronic Funds Transfers (ETFs) between financial institutions

    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: 

    • Joint Savings Plus Account
    • Tax-Free Savings Account (TFSA)
    • Registered Retirement Savings Plan (RRSP)
    • First Home Savings Account (FHSA)
    • US Dollar Account 

    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 slightly lower 2.25% 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 

    [Offer productType=”SavingsAccount” api_id=”60fee79313fd2f260ff90749″ id=”173809″]

    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

    [Offer productType=”CreditCard” api_id=”63d2cb6a18196b6d2e1928c2″ id=”198047″]

    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 (insert angry emoji here).

    Budgeting features

    Neo Financial and EQ Bank also diverge when it comes to budgeting features. Neo is designed to help you control spending and maximize cash back earnings, while EQ is more like a traditional bank with better interest rates.

    Even though Neo doesn’t give you any functional budgeting tools, it does provide insights into your spending habits across expense categories. This helps you stay on track to meet your goals and reveals any problematic habits that could derail your efforts. 

    EQ Bank offers no such spending insights. However, it does allow you to separate the money you need to spend from the money you want to save. Simply transfer your spending allowance from your Savings Plus Account to the EQ Bank Card. 

    Savings tools

    EQ Bank wins out over Neo Financial in the savings department. With EQ, you can open up to 5 different savings accounts and stash money away for different goals. Set up automatic transfers between the accounts to put your contributions on auto-pilot. And it bears repeating that EQ offers a better interest rate on deposits at 2.50% vs Neo’s 2.25%.

    Unfortunately, Neo Financial is a one-trick pony restricting users to a single account. There is no place to stash the money you don’t want to spend. So if you struggle with discipline, you’ll need to supplement your banking with either a chequing or savings account elsewhere.

    Other Neo Financial features 

    If you’re looking for credit, lending, and investing solutions, you’re in luck. Neo offers additional tools to help you achieve various financial goals, such as: 

    Credit Cards

    Neo Financial offers a lineup of 3 different credit cards to suit diverse credit profiles, needs and preferences, such as:

    Neo Mastercard

    The traditional Neo Mastercard is one of the best cash back cards on the market – offering an average of 5% cash back on purchases, and up to 15% cash back at Neo partners. Neo promises to top up your cash back rewards if your monthly average cash back rate drops below 0.5%. 

    Neo Secured Credit

    [Offer productType=”CreditCard” api_id=”6209e06d9c5f4c05c0de0111″ id=”171391″]

    The Neo Secured Credit is one of the best secured cards in Canada if you don’t qualify for a traditional credit card. Neo Financial is now reporting live secured card transactions to Transunion and all previous transactional history has been retroactively captured. The minimum $50 security deposit is the lowest I’ve seen, making it a great option if you don’t want to lock up a lot of cash. It also comes with the same great cash back program as the traditional Neo Credit. 

    Hudson’s Bay Mastercard

    Neo Financial also issues the Hudson’s Bay Rewards Mastercard. With this card, you earn points on all purchases and double the points on Hudson’s Bay purchases made in-store and online at thebay.com. You also earn an average of 2% cash back when you shop at Neo partner retailers. 

    Neo Mortgage 

    Neo Mortgage is a digital platform that allows you to pre-qualify, compare mortgage rates, and find the best deal from their network of lenders, all while giving you the freedom to manage your mortgage payments and renewals online. Their mortgage advisors do not work on commission, so there is no reason to push you toward a higher interest rate. However, the number of lenders they work with is quite limited, so you might not get the best rate available on the market. 

    Neo Invest

    Neo offers a fully-managed online investment platform. With support for RRSPs, TFSAs, and personal accounts, you’ll have the flexibility to invest in a way that suits your financial goals. And with a management fee of only 0.75%, you’ll also save big compared to the hefty 2% fees charged by traditional banks. However, if you prefer to self-direct your investments, this may not be the right choice for you.

    Other EQ Bank Features

    Unlike Neo Financial, EQ Bank does not offer any credit cards. Having said that, EQ does provide a diverse range of other financial services that still cater to most of your banking needs. Whether you require investment options, international transfers, or a mortgage, you can easily access many of the traditional banking services you’re used to from your EQ dashboard. 

    Mortgage Marketplace 

    EQ Bank offers a Mortgage Marketplace with a much larger network of Canadian lenders than Neo Mortgage. You can compare mortgage rates and get professional advice from a mortgage broker, as well as access exclusive rates on Equitable Bank mortgages. Online applications are easy and can be done in just a few minutes. 

    Investing products

    EQ Bank provides Guaranteed Investment Certificates (GICs) with rates ranging from 2.65% to 4.75%, and terms from 3 months to 10 years. You can choose from a variety of registered, non-registered, RSP, and TFSA GICs and can use EQ’s calculator to determine your return on investment.
     

    Global money transfers 

    International money transfers powered by Wise are available through EQ Bank, which are up to 8x cheaper than other transfer services, and have no hidden fees. Recipients can receive their money in as little as a few minutes. 

    Neo Financial vs EQ Bank: Which one should you pick?

    When deciding between Neo Financial vs EQ Bank, it is important to weigh the pros and cons of each platform. Both offer high-interest hybrid accounts with free unlimited transactions for everyday use, but Neo Money has the advantage of offering significantly more cash back on purchases and various credit card options. The downside is that you are limited to one account and joint accounts are not currently available.

    [Offer productType=”SavingsAccount” api_id=”60fee79313fd2f260ff90749″ id=”173809″]

    EQ Bank, on the other hand, has a higher interest rate on deposits and allows you to open up to 5 different accounts. They also offer a much wider variety of accounts to choose from and support global money transfers. EQ’s mortgage marketplace has a much larger network of Canadian lenders but its investment products are limited to GICs. 

    [Offer productType=”CreditCard” api_id=”63d2cb6a18196b6d2e1928c2″ id=”198047″]

    If your banking needs are fairly simple, or cash back and budgeting are very important to you, Neo Financial is the way to go. But if you care more about earning interest, require multiple accounts, or need to find the lowest mortgage rate, then EQ Bank is the better choice for more complex needs.  

    Heidi Unrau is a senior finance journalist at Hardbacon. She studied Economics at the University of Winnipeg, where she fell in love with all-things-finance. At 25, she kicked-off her financial career in retail banking as a teller. She quickly progressed to become a Credit Analyst and then Private Lender. This hands-on industry experience uniquely positions her to provide expert insight on loans, credit scores, credit cards, debt, and banking services. She has been featured in publications such as WealthRocket, Scary Mommy, Credello, and Plooto. When she's not chasing after her two little boys, you'll find her hiding in the car listening to the Freakonomics podcast, or binge-watching financial crime documentaries with a bowl of ice cream. Fun Fact: Heidi has lived in five different provinces across Canada and her blood type is coffee.