Building a strong financial profile is key to success in Canada.
As a newcomer to Canada, you can rest assured that your new home country has a strong, reliable, and straightforward financial system. The Canadian financial system includes banks, trust companies, and credit unions, all of which can help you manage your money.
You need to start by learning about the system, opening a Canadian bank account, building your credit, and getting smart about your credit score. It is also wise to access one of the many organizations designed to help new Canadians fully understand the financial system. Make sure you check out the Canadian Centre for Financial Literacy, a national organization that offers training to smaller groups in communities across the country. You can have a look at the list of affiliated community organizations it has trained, and find one in your new city.
Remember that in the event your bank fails, the Canada Deposit Insurance Corporation (CDIC) or the Deposit Insurance Corporation of Ontario (DICO) (in Ontario only) will protect up to CAD $100,000 of the money you place into a bank account. This allows you to invest and save with confidence.
How to Open a Bank Account in Canada
Opening a Canadian bank account is a very simple process. Unlike in some other countries, you can open a Canadian bank account even if you do not have any money to deposit. You do not have to have a job to open a bank account, and you will not be turned away based on your past employment history (or lack thereof). You also have a right to open a bank account in Canada even if you have declared bankruptcy in the past. All you need to have is the correct personal identification, which includes (but is not limited to) a driver’s license, residency card, passport, Canadian birth certificate, or Social Insurance Number (SIN) card issued by the Government of Canada. See this link for the full list and different alternative options.
What Can You Do with a Personal Bank Account in Canada?
Your bank account will enable you to do the following:
- Open accounts specifically for savings and chequing purposes
- Use online banking services to pay bills and send money to family and friends
- Use automated teller machines (ATMS) with an ATM/debit card (Canadians often call this their bank card)
- Speak to a financial advisor in order to seek guidance about investments and mortgages
- Build a credit rating, and potentially be issued a credit card
Ways for Newcomers to Canada to Build a Good Credit Rating
It is impossible to overstate just how important building your credit rating is when you move to Canada. While you may have impeccable credit in your home country, this does not normally transfer to Canada. If you want to buy a home, a car, or another significant purchase on credit, you will need a strong credit rating. Also, you will often have to undergo credit checks to rent an apartment or get certain jobs.
- An unsecured credit card – It is a good idea to apply for a Canadian credit card as soon as you can. A lot of the Big Banks (listed below) offer newcomers a special credit card with a low line of credit. This is the case with National Bank’s “Offer to Newcomers” package or Scotia’s “Start Right” program. Begin to use your credit card right away.
- A secured credit card – If you cannot obtain an unsecured credit card, you should get a secured credit card. This means that you will put money down as a deposit on the card. Over time, your repayments will be reported to the credit bureaus. This builds your credit history.
- Apply for a post-paid mobile phone plan – Certain mobile carriers, including Telus, do not require a credit history. They will report your post-paid repayments to the credit bureaus, building your credit. You might be tempted by a pre-paid phone, but a post-paid plan is much better for your credit history.
- Pay all of your credit card bills on time, every time – Again, this cannot be stressed enough. If you are late on your credit card bill payments, your credit history is negatively impacted. You do not need to pay the entire balance – even making just the minimum payments (which we do not recommend) will build your credit. If you cannot make the payment due to financial difficulties, do not avoid the problem. Call the bank and make arrangements – they can be surprisingly understanding and help you with a grace period so that your credit score is not impacted.
- Acquire different types of credit – You will build a good credit score faster when you use different sources of credit. Try to get a credit card, a post-paid mobile phone, and even a car or other consumer loan so that you can build a strong history faster.
Which Canadian Bank Is Best for Newcomers?
Canada has many banks and credit unions of different sizes. Some are large institutions that have braches around the globe, while others are smaller and based in individual communities, or are aimed at specific professions (i.e. Teachers’ Credit Unions). The right bank for you might depend on a variety of factors, which can include where you live, your specific financial needs, and if the bank has a partnership with one you have used in the past.
Good Advice for Newcomers about Canadian Finances
Moving to Canada is an exciting opportunity, and you have a lot of potential in your new home. That said, there are some important things that you should consider before leaving your home country. Seeking advice about the Canadian financial system before you arrive will help you make a successful start.
- Get prepared - Before you arrive, see if the Canadian consulate (or organizations like the Canadian Immigration Integration Project) in your home country offers financial workshops. These workshops are designed to help newcomers to Canada integrate into the labour market and learn about the financial system prior to arrival.
- Don’t be afraid to ask for help – Do some online research about the free government services that are offered where you plan to move. You can also determine whether you qualify for government benefits. The Immigration, Refugees and Citizenship Canada website offers a complete list of community and government services, and you can make an appointment with them before you even leave your home country.
- Ask for advice on the right bank account – Your new bank will be more than happy to help you choose the right kind of account for your needs. They will base this on your anticipated transaction patterns and the potential average monthly balance that you’ll keep in your account. This will help you save money on service fees over time.
With this advice and guidance, you are well on your way to a successful financial future in Canada. Just remember to make those payments on time, and build your credit history!