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EQ Bank has been around for quite a few years now, and clients love how they’ve simplified banking. You get a high interest rate with no everyday banking fees. What’s not to like right? Well, there was one complaint. EQ Bank didn’t offer a Tax Free Savings Account. Saving is great, but it would be even better if it could be done tax free.

Fortunately, EQ Bank has listened to its consumers and has introduced the EQ Bank Tax Free Savings Account. As you can imagine, it’s similar to its Savings Plus Account where you get a good interest rate without having to pay everyday banking fees. Read my EQ Bank Tax Free Savings Account review now for the full details.

EQ Bank TFSA features

  • TFSA Savings Account
  • 2.30%* everyday interest rate
  • TFSA GIC

The EQ Bank TFSA only gives you two options. There’s the TFSA Savings Account and TFSA GIC. The TFSA Savings Account pays a respectable interest rate that is typically higher than traditional banks. If you’re interested in one of EQ Bank’s GICs, the rates mirror their existing EQ Bank GICs, so you can quickly look up the current rates.

Unfortunately, you can not purchase ETFs, mutual funds, stocks, etc., within your EQ Bank TFSA. The account is built for fixed income investments, so if you’re looking for exposure to equities, you’d have to go somewhere else.

For you to open an EQ Bank TFSA, you must have an active Savings Plus account. All contributions and withdrawals can be done online, so it’ll be easy to move your money around.

There’s a plan limit of $200,000, but note that this is separate from your contribution limit. To find out your current contribution limit, you’d have to check your CRA My Account.

EQ Bank TFSA contributions

All contributions to your EQ Bank TFSA is done online from your Savings Plus Account, Joint Account, or via an electronic funds transfer (EFT). In case you’re unfamiliar with EFTs, it’s when you link EQ Bank from another bank directly.

It’s also possible to transfer money into your EQ Bank TFSA from another bank where you’re currently holding your TFSA. You’d have to initiate the transfer online first, and then the customer center will take care of the rest. For reference, here’s a detailed guide on how to transfer your TFSA to another financial institution.

EQ Bank TFSA withdrawals

Withdrawals from your EQ Bank TFSA can be done at any time to your Savings Plus Account, Joint Account, or EFT. While this is convenient, you need to ensure that you understand the contribution rules if you plan on redepositing any funds later in the year.

For example, let’s say you have a maximum contribution room of $6,000, and you deposited $6,000 on January 1st. If you withdrew $3,000 in July, you wouldn’t be able to put that $3,000 back in until the following year.

The contribution and withdrawal rules can sound complicated, but once you understand them, they’re pretty straightforward.

CRA reporting

EQ Bank reports any TFSA deposits you make to the CRA. While your CRA My Account is great for finding out how much contribution room you have left, it’s not always accurate.

Generally speaking, it only updates once a year, so any deposits you make throughout the year should be tracked manually on your own.

How does the EQ Bank Tax Free Savings Account compare to others?

Comparing the EQ Bank Tax Free Savings Account to others can be tricky. EQ Bank has chosen to focus on fixed income investments, so the account is designed for people who need to keep their money relatively safe. It’s ideal for people who have a short term goal in mind and want to ensure their money doesn’t decrease in value.

For example, someone who is planning on buying a home within the next 1-5 years could park their money in the EQ Bank Tax Free Savings Account. That would allow them to earn some interest without having to pay any taxes.

If you’re the type of person who wants to maximize their gains for retirement, then this account isn’t for you since you can’t invest in stocks, ETFs, or mutual funds.

Is EQ Bank safe?

EQ Bank is brought to you by Equitable Bank and they’ve been operating in Canada for decades. More importantly, Equitable bank is a Member of the Canadian Deposit Insurance Corporation (CDIC). As a member, your deposits are protected up to $100,000 for each eligible account.

CDIC considers your TFSA separate from your HISA and joint account. In other words, if you have all three, you would have up to $300,000 in coverage.

Final thoughts

My EQ Bank Tax Free Savings Account review is positive. Although you’re limited with what you can invest in, the EQ Bank TFSA is perfect for people who need to keep their money safe and don’t want to pay any taxes.

EQ Bank Tax Free Savings Account Review

2 Comments

  1. Gregory Jones on January 2, 2021 at 1:22 PM

    I would be worried that the interest rate can change at any time as i don’t see any guarantee for the rate

    • Barry Choi on January 2, 2021 at 2:40 PM

      Gregory,

      There’s a 100% chance that the interest rate will drop. That said, EQ Bank does typically have a higher interest rate than most banks so this is still handy for people who want to keep their TFSA in cash.

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