Wel­come to my new “How To… Canada” series! In this series, I’ll try to put my knowl­edge to good use and shed some light on my new coun­try: Canada. You will learn how some immi­gra­tion tips and tricks, how to improve your pro­fi­ciency in both offi­cial lan­guages, how to find a job, how to set­tle in Canada etc. I’ll pub­lish a new “How To… Canada” post every Saturday.

Unless you’re from the U.S.A, chances are you will find bank­ing a bit con­fus­ing when arriv­ing in Canada. Inter­act, check­ing and sav­ing accounts, credit cards may be new to you. Besides, open­ing a bank account on a res­i­dent visa and apply­ing for a credit card can seem chal­leng­ing. Let’s have a closer look at that!

The main com­mer­cial banks in Canada are:

As a tem­po­rary or a per­ma­nent res­i­dent in Canada, you will need two pieces of per­sonal iden­ti­fi­ca­tion (your Per­ma­nent Res­i­dent card, SIN card, Health card, Cana­dian dri­ver license or for­eign pass­port are among the accept­able piece of I.D) to open a bank account. You do not need to be employed or make a min­i­mum deposit to open the account.

Most banks are used to deal with new Per­ma­nent Res­i­dents, but they might not be famil­iar with your sta­tus if you hold a spe­cific tem­po­rary work per­mit. Be pre­pared to explain a few details and to show you’re legal in Canada.

You will first need a check­ing account, i.e for day to day bank­ing. You will be given a debit card with a PIN num­ber to with­draw money. Note that you will pay a fee for pretty much every­thing: monthly account fee (any­thing from $2.00 to $15/ month), with­drawal fee (espe­cially when you with­draw at another bank’s ABM), cheque fees… To see an exam­ple of fees that can be charged, have a look here.

This can be con­fus­ing but remem­ber a few rules:

• Always with­draw money from your bank ABM
• Do most of your trans­ac­tions online, as they are likely free
• Cal­cu­late how many trans­ac­tion you do a month and pick a pack­age accord­ingly. For exam­ple, if you live by your­self, you’re pretty unlikely to do 50+ trans­ac­tions a month… so a basic 15 transactions/ month pack­age should be enough. But as a fam­ily (or so I’ve been told!) you may want to con­sider pay­ing a slightly higher monthly fee that allows you up to 20÷30÷40 etc. transactions.

Cana­di­ans don’t really use cheques (unlike French!). Which is good in a way because you have to order them and pay for them (in France, cheques were auto­mat­i­cally ordered by the bank for you and were free). Cana­di­ans mostly use Inter­act, the national debit ser­vice. It’s fast and convenient.

Cana­di­ans also love their credit card and that might be another chal­lenge for you. North Amer­ica has a credit card cul­ture (read “A Nation Under Debt”…) and you will need a piece of magic plas­tic sooner or later. Indeed, credit card help you build a credit his­tory — and you will need a good credit his­tory to apply for a mort­gage, a loan etc. in the future. The main credit card com­pa­nies are Visa, Mas­ter­card and Amer­i­can Express (Amex).

Catch 22 here is you need a good credit his­tory to get a credit card, but you need a credit card to get a credit his­tory. From my own expe­ri­ence, credit his­tory estab­lished in your home coun­try is rarely taken into account, which can be frus­trat­ing (or maybe a good thing for some of us!).

A side note about the credit his­tory: you will always hear a bunch of com­mer­cials about check­ing your credit his­tory reg­u­larly to spot iden­tity thief etc. These com­pa­nies try to scam peo­ple into pay­ing to see their credit report. Get­ting a copy of your credit report is free from the three credit bureaux (Equifax Canada, Tran­sUnion Canada and North­ern Credit Bureaus) if you just fill up a cou­ple of forms and mail them. I tried a few weeks ago and down­loaded the form from Tran­sUnion and received my report for free two weeks later. Please, don’t get scammed and don’t pay to see what the law requires these com­pa­nies to dis­close!

You may try the fol­low­ing meth­ods to get your first credit card:

• Apply for a store credit card (i.e Sears, Cana­dian Tire, The Bay etc.). These credit cards typ­i­cally have extremely high inter­est rates (make sure you pay them in full every month!) but they can be less picky about their appli­cants. You will then be able to apply for bet­ter credit cards.
• Ask your bank. They know the newcomer’s credit card prob­lem and some bank will offer you to “lock” a cer­tain amount on a bank account (typ­i­cally $500 — $1,000) and will issue you a low limit credit card (i.e $500). If every­thing goes well and you pay your credit card in full, they will “unlock” your money a few months later and may even increase your credit card limit.
• If by any chance you’re a stu­dent (even part-time…), men­tion it and you may apply for a stu­dent credit card. These card usu­ally have a very low limit ($500) but are given some­what more eas­ily. And a few months later, you can apply for a higher limit if needed.
• If every­thing fail, just wait a few months (or maybe even a year…). Give your­self some time to set­tle, get a job, pay your bills and re-apply later.
  

In Canada, you also have many ways to save and invest money. Sav­ing accounts, reg­is­tered sav­ing accounts, mutual funds etc. are widely avail­able but depend on your bank.

Those new to Canada’s way of bank­ing (and gen­er­ally speak­ing, North America’s) might find the fol­low­ing links interesting:

• Bankrate: a good — some­what messy — web­site ded­i­cated to money. There are many inter­est­ing arti­cles regard­ing credit cards. Start by read­ing credit reports and scores, using a credit card to estab­lish good credit and the sad-but-true 20 sneaky credit card tricks. (This sounds like spon­sored links but it isn’t!)
• Set­tle­ment: a series of infor­ma­tive arti­cles about per­sonal bank­ing for new­com­ers in Canada.

Happy bank­ing!

Related arti­cles:

1. Cash, Debit or Credit? Canada’s Three Pay­ment Methods
2. A Nation Under Debt
3. 10 Ways to Not Become Poor in Canada
4. How My Bank Account Was Com­pro­mised (And Depleted)
5. How to Avoid… Bank­ing Scams
6. Learn­ing Per­sonal Finance, the North Amer­i­can Way