Understanding the Canadian Banking System: A Guide for Newcomers to Canada

Moving to Canada can be an exciting and overwhelming experience filled with new opportunities and challenges. While there are many decisions to make, such as finding a place to live and work, another important decision to make is opening your Canadian bank account. 

While you probably had a bank account before coming to Canada, banking in Canada may be different from what you’re used to, as banking systems can vary from country to country. Here is some important information to keep in mind when looking to open a bank account in Canada. 

Banking for newcomers to Canada

Opening a bank account

Anyone is eligible to open a bank account in Canada if they meet the identification requirements. You can open an account even if you don’t have a job or money to deposit, or if you’ve been bankrupt. It is also possible to open a bank account with proper identification if you are not a Canadian citizen.

Generally, you will need two documents from a reliable source to open a retail deposit banking account–one of which has your name and address and another that has your name and birthdate. One of these could be a foreign passport. A detailed list of the types of documents you may use is available on the Canadian Bankers Association website.

There are no-fee accounts available for newcomers. Fees associated with different types of accounts vary based on the additional services they provide. You can compare the banking packages available using the online interactive Account Selector Tool available from The Financial Consumer Agency of Canada. 

Bank deposits are secure

Canadian banks are well-managed and have been recognized worldwide for their stability. In the unlikely instance of a bank failure in Canada, your deposits in your Canadian dollar and foreign currency savings and chequing accounts, as well as term deposits (up to $100,000 per type of account per bank), are protected. The institution must be a member of the Canada Deposit Insurance Corporation (CDIC), and it’s important to note that all Canadian banks that take retail deposits are members of CDIC.

Many choices for banking in Canada

Canadians benefit from the high degree of competition and choice in the Canadian financial services marketplace. Today there are 80 domestic and foreign banks currently operating in Canada and, of those, more than 40 offer financial products and services to consumers – including bank accounts, credit cards, loans and investments.

Understanding interest rates

Interest rates for different products are set by each bank. The decision on how much interest to charge on a loan depends on how risky the loan is. Canada has a very competitive banking industry, so make sure to shop around for the best rate.

Savings tools available

Banks offer different types of savings accounts to help you save your money. The Government of Canada has also created a number of special registered savings accounts to encourage tax-sheltered savings. These registered accounts are all available from banks in Canada and include:

• Registered Retirement Savings Plans(RRSPs) to save for retirement
• Registered Education Savings Plans(RESPs) to save for a child’s education
• Registered Disability Savings Plans(RDSPs) to save for the financial security of a family member with disabilities
• Tax-Free Savings Accounts(TFSAs) to save for the future
• First Time Home Savings Account (FHSA) to save for your first home, tax-free

Banking in Canada is convenient

Access to branches & automated banking machines (ABM) nationally

Canada has a national system of banking where many retail banks have branches throughout the country. In Canada, you will have access to a national network of 5,783 branches, 18,515 bank-owned ABMs, debit and Tap & Pay payment services at more than 500,000 retailers in Canada as well as online, mobile app and phone banking.

Mobile payments and mobile wallets

Banks offer mobile banking and payment services and apps that allow customers to perform a variety of transactions through their mobile devices, including making payments. You can store your payment card information in a mobile wallet so you can make contactless payments from your debit card, credit card or prepaid card from your phone.

Sending money to family and friends abroad

As a newcomer to Canada, you may want to regularly send money to family and friends back home. Banks in Canada can make these transfers, called remittances, to family members or friends abroad in a number of different currencies. Typically, the person you are sending money to will need to have a bank account but they may also be able to pick up the money at a bank branch without an account if they present the proper identification.

If you are sending money to someone in another country who does not have a bank account, there are money transfer services such as Western Union and MoneyGram that can do that for you.

Understanding payment cards

Credit cards

There is a lot of choice in the type of cards available and in the benefits they provide. A credit card is a convenient and flexible payment tool that allows you to borrow money for your purchases. It is accepted at millions of locations worldwide in more than 200 countries and territories. It’s important to shop around for the card that best meets your needs. The Credit Card Comparison Tool from the Financial Consumer Agency of Canada makes this easy.

Debit cards

Unlike a credit card, where you are borrowing money to pay for a purchase, debit cards withdraw money directly from your bank account when you make a purchase or use your debit card at an ABM. Depending on how many debit card transactions you make each month, there are a number of bank account options to choose from, including low-fee and no-fee accounts that offer at least 12 debit transactions per month. More information about making purchases with your debit card can be found on the Financial Consumer Agency of Canada website.

Resolving problems with your bank  

Banks have a clear process in place to help resolve complaints or problems. If you need help to solve a problem with a particular financial product or service, refer to these steps to settle your dispute.

Additional resources to help

Many banks offer advice, checklists and links to additional resources tailored to newcomers’ needs. Check out the Banking for Newcomers to Canada page on the CBA website for links to bank initiatives that can help with the transition to Canada.

This blog post was written in collaboration with the Canadian Bankers Association (CBA). The CBA is the voice of more than 60 domestic and foreign banks that help drive Canada’s economic growth and prosperity. The CBA advocates for public policies that contribute to a sound, thriving banking system to ensure Canadians can succeed in their financial goals. www.cba.ca.