Best Hybrid Bank Accounts In Canada 2021

The first official bank in North America appeared in 1791 in Philadelphia, USA, though even older banks appeared in Medieval Europe in the 1400s. An old practice, banking has continued to play an important role in engaging the economy and moving the flow of money. With time, however, banks have evolved their practices, regulations, and technology, and that hasn’t stopped in 2021.

As the market changes and innovation continues, people continue to look for banking and financial solutions that are tailored to their personal and financial situations, and that doesn’t stop with the traditional chequing and savings accounts, or with online banking. People want more flexibility in how they can manage and access their money, and a hybrid bank account is one innovative way of achieving that.

What Is A Hybrid Account?

Resembling a high-interest savings account, a hybrid bank account boasts a similar interest rate to a high-interest savings account, with the flexibility of a regular chequing account. Depending on your financial needs, you have the flexibility to let your money stay in the account and grow interest or you can use your account daily to pay bills, send e-transfers, and withdraw money. Most hybrid accounts offer interest rates ranging from 0.05 – 2%, while most chequing accounts offer minuscule to no interest at all. In short, a hybrid bank account gives you the interest-accumulating power of a savings account, combined with the freedom of a chequing account.

Advantages And Disadvantages Of A Hybrid Account

While a hybrid bank account has many advantages for the right person, there are also a couple of negative factors to consider before deciding to sign up for one. Take a look at these pros and cons before making a decision:

Pros	Cons
Low fees	No physical bank branch
Unlimited transactions*	Limited functions as a bank card compared to other credit and debit cards
High-interest rates	Limited ATMs for cash withdrawal
Easy access online

*Most hybrid bank accounts offer unlimited transactions but remember to read the fine print to make sure.

Best Hybrid Accounts In Canada

	Fees	Interest	Main Features
EQ Bank Savings Plus Account	None	1.25%	– Highest interest rate – Absolutely no fees – No min deposit – Max deposit of 200,000
KOHO Save	None	1.2%	– High, long-term interest rate – Cash back on purchases
Manulife Advantage Account	None, unless your account balance is under $1,000	0.15%	– CDIC-protected – No fees with balances over $1,000
Simplii Financial No-Fee Chequing Account	None	– 2% till March 2021 – 0.05% after	– High promotional interest rate – Many ATMs for withdrawal

EQ Bank Savings Plus Account

The EQ Bank Savings Plus Account is an attractive choice for spenders who like to keep a lot of money in their chequing accounts. Applicable to accounts up to 200,000, this hybrid account offers a high-interest rate of 1.25% on all deposited funds, which is the highest out of all the hybrid accounts listed here. Moreover, there are no fees and deposits are CDIC protected.

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KOHO Account

Opening up a KOHO account is free and easy. You’ll earn a 1.2% interest rate on all your money, from your savings to your spendables. KOHO offers a long-term rate, with no promotional period, no fees, and minimum balances. Additionally, KOHO lets you earn 0.5% cash back on every dollar that you spend, plus earn even more when you shop with their partners. So, you’re earning interest and extra money just for making purchases using the card.

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Manulife Advantage Account

Manulife’s Advantage Account has a relatively low-interest rate for your deposited funds – 0.15%. Though the account has no fees and the same flexibility as most hybrid accounts, you need to keep a minimum of 1,000 in your account to be eligible to earn interest. If you fail to keep the minimum amount in the account, you’ll be paying per-transaction fees on bill payments, debit purchases, withdrawals and other transactions. Furthermore, your money is CDIC insured in a Manulife Advantage Account.

Simplii Financial No-Fee Chequing Account

Simplii Financial’s No-Fee Chequing Account offers a relatively low-interest rate for your deposits, at 0.05%. They also have no fees on their banking and offer easy access to cash withdrawals through thousands of CIBC bank ATMs across the country. Right now, however, Simplii is offering a promotion of a 2% interest rate on deposits until March 2021, which is high but is also temporary. Check out their website for more information.

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Additional Reading

Hybrid Account FAQs

Is interest earned on the hybrid accounts taxable?

Yes, similar to other high-interest savings accounts, you must pay taxes on the interest you make with a hybrid account. Note that you only need to pay taxes on the interest amount, not the amount of money originally put into the account.

Is a hybrid account better than a high-interest savings account?

It depends on your financial scenario. Hybrid accounts are generally more beneficial to bigger spenders, as they have the opportunity to make interest on money that would otherwise already be sitting in their chequing account. People who keep most of their money in savings, however, might be better off with a high-interest savings account.

Is my money protected by the CDIC with Hybrid accounts?

Your money is safe with hybrid accounts, as the money deposited and interest made is protected by the Canada Deposit Insurance Corporation (CDIC). KOHO and EQ hybrid accounts are insured up to $100,000 by the CDIC, while Wealthsimple Cash accounts are insured up to $1,000,000 by the Canadian Investor Protection Fund.

Final Thoughts

Hybrid bank accounts are great options for people who want more flexibility in their banking. They are especially good for those who keep large amounts of money in their chequing accounts, as they have the opportunity to generate interest. Make sure to inquire about all the incidentals in your bank agreement, such as minimum deposits, CIDC insurance, interest rates, and any administrative fees.

Chrissy Kapralos

Chrissy is a Toronto-based communications advisor. With an English degree from the University of Toronto and editing courses under her belt from Ryerson University, she has continued her lifelong passion for writing and editing. In addition to working for Loans Canada on a variety of financial topics, Chrissy has a few years of resume writing and editing under her belt, and takes great pleasure in helping people find work that fits with their experience and passions. When she isn't working, you can find her practicing yoga, hanging out with her dog, reading up on financial and real estate news, or planning her next trip abroad.