Moving to a new country is a big decision and hopefully you’re excited about arriving in Canada. But moving to another country can also be stressful. There are lots of new things to learn — new customs, new foods, and a new way to organize your finances.
Preparing your finances and learning about the Canadian banking system are some of the most important things you can do before you arrive in Canada. That way, you can arrive stress-free, with your money sorted, ready to enjoy your new home.
Read on to learn everything you need to know about Canadian banking, including how best to get your money to Canada, and what types of bank accounts are available to you once you arrive.
How to get your funds to Canada
First things first, you need to figure out how to get your foreign funds into Canada. You have a few options to do this.
If you have money in several different accounts in your home country, consider moving everything into one account. This will make it simpler when it comes time to move those funds overseas. You will need to either have your money with you when you enter the country, or have sent it ahead so it’s already in Canada by the time you arrive.
Carry your money with you into Canada
If you choose to carry your money with you, make sure you do it safely. And if you carry in more than CAD$10,000, be sure to declare it at the border. Some countries have limits on the amount of money you can leave with, so check with your bank or a financial advisor at home to ensure you’re not carrying out too much. When you arrive in Canada, you must declare all cash and “monetary instruments” (for example, bank drafts and traveler’s cheques) you are carrying, if they have a total value over CAD$10,000.
Wire transfer your money to a friend of family member in Canada
If you have a trusted friend or family member already in Canada, you may choose to transfer your money to them before you leave. This way, your money will be in Canada when you arrive. Then, once you get set up in Canada and open a bank account, transferring your money into your own account will be a simple in-country transaction.
Open a bank account in Canada before you arrive
Another option is to open a bank account with a Canadian bank before you arrive. Many Canadian banks allow newcomers to open accounts from overseas, depending on your visa or residency status upon arrival. Contact your bank of choice to learn how you can open an account from overseas. This option means you can send funds from your home country to your Canadian bank and have it ready when you arrive.
How to open a bank account
Whether you open a Canadian bank account before you arrive in Canada, or you wait until you are in Canada, there are some requirements you need to know. Even if you open an account before you arrive, you’ll still need to visit your bank in-person to activate the account and receive your bank card. You should plan to open or activate a Canadian bank account as soon as possible — ideally within a few days of landing in Canada.
You will need to prove your identity in order to open a bank account in Canada, so you need to have the proper documents. Your documents must be originals, meaning banks will not accept photocopies or photos.
To prove your identity, banks usually require two pieces of identification. One must show your name and date of birth and one must show your name and address. There is a set list of documents banks can accept, but some of them are difficult (or impossible) for newcomers to obtain. If you only have one accepted form of documentation showing your name and date of birth (for example, your passport), you may still be able to open an account with a letter vouching for your identity from another customer at the bank or an upstanding member of the community. If you are unsure, talk to your bank to learn more about identity documentation.
Related reading: Can a visitor open a bank account in Canada?
How to you choose a bank
In Canada, you have a lot of choices, most of which will offer similar services and offers. You should research to determine which bank is the right fit for you. You can also ask family and friends in Canada if they have any recommendations for you.
When making your decision, consider which bank will be most convenient for you and will best serve your individual banking needs. If you intend to conduct in-person banking, look for a bank in your neighbourhood that’s easy for you to travel to. Some banks may even offer services in your home language — if your first language is not English — depending on the neighbourhood.
You should look for a specific “newcomer” account. Most banks offer these. The benefits of a newcomer account are reduced fees for a set period, usually for the first year. They may also offer newcomer credit cards.
“Big Five” banks
In Canada, the so-called Big Five banks are Scotiabank, RBC, BMO, TD, and CIBC. These are the largest banks in Canada and have the greatest number of ATMs (automatic teller machines) as well as brick-and-mortar branches. All of the Big Five banks offer newcomer accounts.
Smaller banks
Canada has many smaller banking options too. Outside the Big Five, the sixth largest bank is National Bank, which predominantly services Quebec and New Brunswick. You can also find another 20+ domestic banks with smaller presences. These banks operate in much the same way as the Big Five but may not offer newcomer-specific accounts. You have the option to choose any bank that suits you — so research what will work best for you.
Credit unions / Caisses Populaires
Credit unions (or caisses populaires in francophone – French-speaking – areas) operate much like banks, but are member based. To join a credit union, you usually need to become a member. Credit unions operate as not-for-profits, serving their members. This means their fees are typically lower than traditional banks and they often offer better benefits too. Credit unions offer chequing and savings accounts, just like banks, as well as loans and other financial services. Credit unions, like banks, are also insured — meaning your money is safe.
Online banking alternatives
Beyond the banks and credit unions, which usually have brick-and-mortar branches that you can visit to speak to a bank representative face-to-face, Canada also has a growing number of online-only virtual banks and other online banking alternatives. While it’s important to know these options exist, they may not be the best option for newcomers as they typically offer fewer services and do not have branches you can visit.
The main types of accounts you need to know about
When it comes time to open your accounts with your chosen bank, you need to know what types of accounts are available.
Chequing
A chequing account is your day-to-day banking account. This is where you will keep the money you plan to spend on everyday expenses like groceries and dining. It’s also the account your employer will use to pay your wages into. A chequing account usually offers no interest on money in the account. When you open a chequing account you will receive a debit card, which allows you to pay for things electronically in store, to withdraw cash from ATMs, and sometimes to pay for things online, depending on the card. Most chequing accounts have monthly or annual fees you need to pay to maintain the account — these account fees are sometimes waived for the first year with newcomer accounts.
Savings
Savings accounts are separate places to put aside money you want to save. Typically, when you open a chequing account, your bank will also open a savings account for you. Traditional savings accounts (like the kind you are automatically assigned when you open a chequing account) are great places to save money for larger purchases, like vehicles, computers, and vacations. Traditional savings accounts like these will give your interest on the money in your account, but it will not be a high interest rate. For longer-term savings, like for retirement, you will want to talk to your bank about other types of savings accounts that offer higher interest rates.
Bank fees to be aware of
Monthly or annual account fees
Chequing accounts at most banks charge monthly or annual fees to keep your account active, although these may be waived for newcomer accounts for a set period.
ATM fees
Many banks will allow you to make unlimited transactions at their own bank ATMs without charge. But if you use another bank’s ATM to make a cash withdrawal, you may be subject to an ATM transaction fee.
Statement fees
Some banks will charge you a fee to send your monthly account statement in the mail. You can avoid this fee by registering for online statements only, if you don’t need the paper version mailed to your home.
Electronic transfer fees
Electronic transfers (or e-transfers) are mostly done through Interac in Canada. This is how you easily transfer money from one account to another across different accounts and banks. This is useful, for example, if you need to send money to a friend, or repay someone you borrowed money from. Most banks allow a certain number of free Interac transfers per month, but may then charge you per transaction if you exceed the number of free transfers.
Overdraft and NSF fees
If you spend past your available funds, you may be charged additional fees. For example, this could happen if you had only $40 in your account and you tried to buy something worth $50, which would take you below zero in your account. Depending on how your account is set up, you may be charged for taking your account into overdraft (below zero), or you could be charged an NSF (non-sufficient funds) fee for attempting the purchase, even if the transaction is declined.
Do you need a credit card?
Credit cards are different from debit cards because with a credit card you’re not spending your own money. With a credit card, you borrow money from your bank each time you make a purchase, and then you pay it back.
Credit cards are great because they give you financial freedom, but you need to be careful you always pay them off quickly or else you will get hit with additional fees and you could end up in debt.
Aside from financial freedom, the greatest benefit of credit cards for newcomers is they help you build your credit score. In Canada, you need a good credit score to get a loan or a mortgage, to lease a car, and sometimes to rent a home. A credit card is one of the fastest ways to build your credit score by making sensible purchases on credit and ensuring you pay them back on time.
When you set up your new account, talk to your bank about credit card options. Some banks have credit cards with small credit limits, which can be perfect for newcomers.
Banking security
Canadian banks are safe places to keep your money. Banks are regulated by OFSI (the Office of the Superintendent of Financial Institutions), Canada’s independent federal regulator of banks, insurers, and pension plans. OFSI ensures Canada’s banks are doing the right thing. For even greater peace of mind, the money you put in your account is also insured by the Government. Thanks to the CDIC (the Canada Deposit Insurance Corporation), each account you hold in a CDIC-protected bank is insured for up to $100,000. That means, in the unlikely event your bank went bankrupt, the CDIC would pay you any money you lost, up to $100,000 per account.
This article is provided for information purposes only. Any information, data, opinions, views, advice, recommendations or other content included in this article are solely those of the author and not of Scotiabank or its affiliates. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article is subject to change without notice. All third party sources are believed to be accurate and reliable as of the date of publication.