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How To Bank in Canada (4/10)

Welcome To Canada! 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:

Happy banking!

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