What You Need to Know About Canadian Banking System

Irrespective of your status in Canada, you need a bank account. Banks can provide relevant information on how newcomers can get started in their new country including financial services and advice. We will be using this article to highlight what you need to know about the Canadian Banking system. You will also find a list of bank resources that may help you with your financial transition to Canada.

The Canadian Banking System

Opening a Bank Account

Anyone can open a bank account in Canada as long as they meet the identification requirements set out in the Bank Act. You can open an account even if you don’t have a job or money to deposit.

Shop Around

Before you decide on the right account for you, you need to shop around for the package that best meets your needs. This will help you to identify accounts that are tailored specifically for new immigrants to Canada. You can compare the banking packages available using the online interactive Account Selector Tool available from The Financial Consumer Agency of Canada (FCAC).

Deposits are Secure

Canadian banks are well-managed, well-capitalized and well-regulated. Your deposits in your Canadian dollar savings and chequing accounts are protected up to $100,000. Most banks are member of the Canada Deposit Insurance Corporation (CDIC). So, your deposits are secure.

READ ALSO: LICENSING BODIES FOR REGULATED PROFESSIONS IN CANADA

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 and the prices that banks and other lenders pay to raise funds in the broader marketplace.

Available Savings Tool

Banks offer a variety of savings accounts to help you save your money. The government of Canada has created special registered savings accounts that accumulate earnings tax-free.

A National System of Banking

in addition to many smaller and regional banks, the five largest banks compete across the country with branches in each of the ten provinces. This enables you have access to similar products at the same price regardless of where you live in Canada. Canadians also have access to a national network of 6,300 branches, 18,775 bank-owned ABMs, debit payment services at more than 450,000 retailers in Canada as well as internet, mobile and telephone banking.

How To Open a Bank Account

To open a bank account in Canada, you need to meet the requirements that are set out in the Access to Basic Banking Services Regulations under the Bank Act. Anyone can open a bank account even if:

• you are in-between jobs,
• there is no money to put in the account right away, or
• you have been bankrupt.

In order to open a bank account, you must present two specific pieces of identification, such as:

• Canadian driver’s license,
• Certificate of Canadian Citizenship,
• Certification of Naturalization, in the form of a paper document or card but not a commemorative issue,
• Permanent Resident card or Citizenship and Immigration Canada Form IMM 1000 or IMM 1442.

A foreign passport and an employee card with a photograph are also acceptable pieces of secondary identification. To find a full list of the kinds of identification that a bank can accept, see Opening a Bank Account.

Saving Plans

The Financial Consumer Agency of Canada offers an Account Selector Tool to help you choose an account that best meets your needs. There are also a number of special registered savings accounts  created by Government of Canada 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
• the 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

Useful Resources to help with the Financial Transition to Canada:

The resources below will also come handy if you are looking to arrive in Canada soon.

• BMO New to Canada — For those planning to come to Canada soon, or who have recently arrived in Canada, this page helps ensure the financial transition goes smoothly.
• CIBC New to Canada — Information on living, working and studying in Canada, as well as getting identification.
• HSBC New to Canada — A checklist for newcomers, advice on getting started in Canada, a Canadian immigration and banking glossary, and information on accounts for newcomers.
• ICICI — Information about a Hello Canada account.
• National Bank of Canada Newcomers to Canada – Information about working, studying and starting a business in Canada along with a checklist.
• RBC Newcomers to Canada — Information about life in Canada, buying a home, employment and financial services that are tailored to newcomers’ needs.
• Scotiabank Startright Program for New Canadians — A banking program for new Canadians.
• TD Canada Trust New to Canada — A summary of TD Canada Trust initiatives to help newcomers better understand banking in Canada.