Alterna Bank Review – No Fee eChequing Account

The only thing that separates Alterna Bank from all brick-and-mortar banks is that it operates as a fully digital bank. When you take brick-and-mortar offices away from the equation, Alterna Bank works just like any other bank available in Canada.

Alterna is one of the most popular digital banks in the country. Seeing as it operates in a country that has a largely younger demographic, it is easier to sell the services of an online bank to millennials and generally younger customers. This is due to the fact that these customers have grown increasingly uncomfortable with the big banks and their hefty fee structures.

Digital banks like Alterna Bank. Oaken Financial, EQ Bank, Tangerine, and a host of others have worked to significantly reduce or eliminate completely in some cases. Alterna Bank is under the umbrella of Alterna Savings and Credit Union Ltd. and acts as the direct banking division of the company.

Alterna Bank

As should be expected of any bank, Alterna offers several banking services including savings and chequing accounts, investment accounts and options, and mortgages among other things. The bank – like most other digital banks – boasts some juicy interest rates on the accounts they offer and have eliminated monthly and annual fees on their chequing accounts.

Established in 2000, Alterna Bank is one of the first exclusively digital banks to open its doors in Canada. Its parent company, Alterna Savings, is the second oldest credit union in the country and has been around since 1908, and currently manages around $8 billion in Canadian asset value.

Together, Alterna Savings and Alterna Bank are known as Alterna Financial Group (AFG). While the banking arm of AFG is fully digital, customers that still want direct human transactions can do so at the branches of Alterna Savings located in the provinces of Ontario and Quebec.

This review will focus on the offerings of Alterna Bank: their popular features, fee structure, account types other extra information you should know before deciding if Alterna Bank is for you.

Alterna Bank Account Types

Whether you need a savings account, chequing account or an account for running your investments, this digital bank has all the regular options for these needs. For whatever account type you opt for, you’ll have the following features available to you:

All account types on offer from Alterna come with no monthly or annual fees as is the custom with most brick-and-mortar banks

The option to open a joint account is available to any group of people who want to save together. Through the EXCHANGE Network, Alterna Bank account holders can use their debit cards on about 3300 ATM’s across the country (Alterna currently does not offer credit cards) at no extra cost.

As a cardholder, you can transfer funds, pay your bills, deposit your cheques and perform all major banking tasks online with your mobile device or a desktop

If you have an account with any other bank or the financial institution (digital or traditional), Alterna Bank allows you to connect such an account to your Alterna account so that you can seamlessly move your money between accounts

Alterna Bank’s various account types are as follows:

Alterna Bank No-Fee eChequing Accounts

This chequing account is by far one of Alterna’s most popular and most utilized account types. It is also undoubtedly one of the best in the country. Customers can use this account at absolutely no cost, and it even comes with a little interest and absolutely no restrictions or limitations to everyday transactions.

• There is no minimum fee requirement attached to this account. You can put in money whenever you want, no matter how little

• No monthly or annual fees for owning the account

• There are no fees or limits attached to your daily transactions, whether debit or credit

• You can send an unlimited amount for free via Interac e-Transfers

• Your deposits carry an annual interest rate of 0.05%

• Overdraft protection can be added to your account at just $2.50 per month (comes with an annual interest rate of 19.99%)

• Access to over 3,300 ATM’s in the country surcharge-free

Alterna Bank High-Interest Savings Account (HISA)

The point of a High-Interest Savings Account is to add value to every dollar in your account while protecting you from the inflation rate in Canada.

Alterna Bank’s HISA achieves this for its holders by offering an attractive 2.20% interest rate on every HISA account. This account type also has no minimum deposit requirement, which means you can open a HISA account with Alterna in 5 minutes, completely online and with no money at all.

You must bear in mind though that while there are no fees attached to your daily transactions, the interest accrued is not tax-free: it is taxed at the same rate that applies to your income level.

• Unlimited daily credit and debit transactions

• Unlimited and free Interac e-Transfers

• No contribution/deposit conditions and no minimum balance requirements on your HISA

• An interest rate of 2.20% for every dollar deposited

Alterna Bank Guaranteed Income Certificates (GIC) Rate

Alterna Bank allows holders of both registered and non-registered accounts (as long as they abide by the terms and conditions of their account types) to invest in its GICs. The Guaranteed Income Certificates offered by Alterna Bank have attractive rates regardless of your deposit term. And Alterna offers tree GIC deposit terms:

• 1 Year deposit term. Currently has a GIC interest rate of 2.40%

• 2 Year deposit term. Currently has a GIC interest rate of 1.70%

• 5 Year deposit term. Currently has a GIC interest rate of 2.07%

To purchase GICs, Alterna required you to have a deposit anywhere from $500 to $500,000. This deposit will then be locked for the amount of time decided by your term deposit of choice. Generally, your GIC interest is subject to tax.

However, if you opt to use a TFSA or an RRSP to purchase your GIC, your investment can grow untaxed. Depending on your investment goals and financial needs, it may serve you better you optimize your investment returns by using all the GIC term deposits offered by Alterna Bank through a GIC laddering investment strategy.

Alterna Bank Tax-Free eSavings Account (TFSA)

This registered investment account works the same way as most other TFSAs from other digital banks. For one, your deposits and withdrawals are not taxed or limited. However, there is an annual contribution limit attached to your TFSA which you must adhere to.

Currently, the annual contribution limit on Alterna Bank’s TFSA is $6000. That is $500 per month if you’re contributing to the TFSA monthly. You can decide to contribute past your yearly contribution limit if you want to.

However, you should know that all the money contributed monthly in excess of your limit will attract a penalty tax of 1% from the Canada Revenue Agency (CRA) for each month the excess stays in your TFSA. So you have to consider whether an over-contribution is worth the trouble.

Also, if you contribute less than your limit for the year, the unused contribution room is carried over into the following year. This constantly makes available the opportunity for you to catch up with your contribution when you can.

For a limit of $6000, for instance, if you’re only able to contribute $3000 for the year, it means your contribution limit for the following year goes up to $9000.

Also, if you have $6000 in your TFSA and you withdraw $2000, the contribution deficit of $2000 is carried over, making the contribution limit for the next year to be $8000.

Alterna Bank offers an attractive interest rate of 2.25% on their TFSAs. Since this is an investment account, it can also hold more than just your savings. Your investments in mutual funds, stocks and more can grow tax-free in your TFSA.

Alterna Bank Registered Retirement eSavings Plan (RRSP)

On the surface, an RRSP is a kind of like a TFSA designed for retirement planning. As expected, it also has no minimum balance or any minimum contribution limits.

Alterna Bank’s RRSP offering gives an interest rate of 2.25% on all deposits. Bear in mind that like the TFSA, there are also tax benefits as well as a maximum contribution limit.

Alterna Bank Mortgage Rates

These are perfect for people looking to take out a loan for their home buying needs. Alterna Bank offers its customers two mortgage rate options:

• 3-year fixed closed mortgage. Currently at a mortgage rate of 2.79%

• 5-year variable closed mortgage. Currently at a mortgage rate of 2.94%

Also, closing costs such as legal and appraisal fees that come with taking out a mortgage can often be annoyingly expensive. So to sweeten the deal, Alterna Bank will cover these closing costs up to the tune of $800 to give you a little financial breathing space.

Alterna Bank Fees

Sounds counter-intuitive after all you’ve read so far, right? Alterna Bank is known for its lack of a monthly or annual fee on its accounts. It also places no fees on the daily digital transactions of its accounts.

However, there are cases when a fee is taken. Some of them include:

• Requesting for an account statement on paper ($2 per request)

• Requesting for your cheque image in your statement ($2 per request)

• Interac ATM Withdrawals ($1.90)

• Overdraft protection ($2.50 per month)

• Non-sufficient funds (NSF) fees ($42.50)

• Personalized cheques

• And more

Conclusion

The decision as to whether Alterna Bank is a right fit can only be answered properly by the one who needs their services.

Alterna certainly has a lot going for it in terms of their little to no fee structure, ease and flexibility of use of their accounts, investment opportunities, mortgages, and their long-standing reputation in the digital banking industry.

If you’re all about the fees, there are options like Tangerine that perform better.

For instance, Tangerine offers an interest rate of up to 0.65% on their chequing accounts which is significantly higher than Alterna Bank’s 0.05% chequing account interest rate. Tangerine also offers a 2.75% on every HISA for its first 6 months. They also offer a 2% cash-back credit card.

Alterna is a good option to consider and is among the top 10 digital banks in Canada. As with other digital banks, all deposits you make into your Alterna Bank account is CDIC-insured against insolvency up to $100,000 for each account category.

If you feel comfortable doing all your banking via online channels on your mobile devices and you do not want any face-to-face interaction, Alterna Bank is a good option for you.

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