Canadian Banking
Guide

Arriving in Canada and diving into the intricacies of the Canadian banking system can be a bewildering experience for newcomers. To alleviate this confusion, we have compiled an exhaustive guide to banking in Canada, shedding light on the basics, recommending the best banks for newcomers in 2024, and guiding you through the process of opening a new bank account.

Understanding the Canadian Banking Landscape

Big 5 Banks

In Canada, the banking sector is predominantly dominated by the Big 5 banks, established entities that have been the bedrock of the country’s financial landscape. These are:

  1. Scotiabank
  2. TD Canada Trust
  3. CIBC (Canadian Imperial Bank of Commerce)
  4. Royal Bank of Canada (RBC)
  5. Bank of Montreal (BMO)

Challenger Banks

Emerging on the scene are challenger banks, disrupting traditional banking norms with a focus on online-only services. Notable players in this space include:

  • Tangerine
  • EQ Bank
  • Simplii Financial
  • Motusbank

Additionally, Canada boasts Credit Unions, institutions providing services akin to banks, but with a unique structure and mandate, emphasizing community benefit.

Banking Fundamentals in Canada

Banking Costs

One significant departure from some international banking norms is that in Canada, you often pay for your everyday banking account. Most accounts come with a monthly fee, typically waived if your closing balance exceeds a certain amount. While this may seem counterintuitive, several newcomer-friendly accounts waive fees for the initial 6 to 12 months.

Also Read:

Things You Need to Know About Life in Canada as an International Student
Know How to Navigate Through Canada Immigration Process Successfully
A Guide to Applying for Proof of Canadian Citizenship
A Brief Overview of Language Test Requirements For Canadian Immigration

Cashless Transactions and Caveats

Canada is well-accustomed to cashless transactions, with widespread acceptance of Visa, Mastercard, and, to a lesser extent, American Express. Contactless payments, with limits ranging from $100 to $250, are commonplace. However, certain traditional aspects of banking, such as cheques, remain prevalent. Online banking, while robust, may not seamlessly replace branch transactions.

Chequing Account Basics

A chequing account serves as the hub for day-to-day transactions in Canada, distinguishing itself from savings accounts meant for accumulating funds. Understanding the transaction limits imposed by banks is crucial, as exceeding these limits may incur additional charges.

Key Banking Terminology

To navigate the Canadian banking lexicon, familiarize yourself with key terms:

  • Interac: Canada’s debit card system, equivalent to Visa Debit.
  • Interac e-Transfer: Facilitates online bank transfers using email addresses as unique identifiers, with added security measures.
  • Routing Number and Account Number: Essential identifiers for bank accounts in Canada, with routing numbers comprising Institution and Branch numbers.

ATMs and Credit Unions

Canada boasts an extensive network of ATMs where you can withdraw cash, with major banks providing fee-free withdrawals from their ATMs. Credit Unions, an alternative to traditional banks, operate with a non-profit ethos, serving customers similarly to banks but with a distinct community-focused structure.

Optimizing Money Transfers to Canada

For newcomers seeking cost-effective international money transfers, services like Wise (formerly TransferWise) offer competitive rates and ease of use.

Choosing the Best Bank for Newcomers

In selecting the best bank for newcomers to Canada, certain criteria are paramount:

  • No Monthly Fees: The account should be free, with no unreasonable restrictions on transactions.
  • Quick and Easy Setup: Opening the account should be a seamless process.
  • Credit Card Guarantee: A credit card should be guaranteed as part of the account, aiding newcomers in building a Canadian credit history swiftly.

Recommended Banks for Newcomers in 2024

BMO NewStart Program

  • Eligibility: Permanent resident or foreign worker arriving in Canada within the last 5 years.
  • Fee: No monthly fees for one year.
  • Credit Card: Yes, with a variety of options.
  • Welcome Offer: $600 cash offer and additional perks with qualifying activities.

CIBC Welcome to Canada Package

  • Eligibility: Landed immigrant status received in the last 5 years.
  • Fees: No monthly fees for two years.
  • Credit Card: Yes, with a range of options.
  • Welcome Offer: $350 cash offer and additional benefits with qualifying activities.

National Bank Newcomers

  • Eligibility: All newcomers to Canada within the last 5 years.
  • Fee: No monthly fee for up to three years.
  • Credit Card: Yes, with various options.
  • Welcome Offer: No upfront welcome offers, but substantial savings with a fee waiver.

TD New to Canada

  • Eligibility: Permanent or temporary resident of Canada for 5 years or less.
  • Fee: No monthly fees for one year.
  • Credit Card: Yes, with diverse choices.
  • Welcome Offer: $300 Amazon gift card and additional benefits with qualifying activities.

RBC Newcomer Advantage

  • Eligibility: Newcomers and international students arriving within the last 5 years.
  • Fees: No monthly fees for one year for select accounts.
  • Credit Card: Yes, with various options.

Scotiabank StartRight Program

  • Eligibility: Canadian Permanent residents from 0–3 years in Canada, International Students, and Foreign Workers.
  • Fees: No monthly fees for one year.
  • Credit Card: Yes, with a range of choices.

Choosing Your Ideal Bank

The best bank for newcomers ultimately hinges on personal preferences and needs. While the mentioned banks offer comparable products, the deciding factor may be the welcome bonuses or specific credit card options.

In our experience, Scotiabank’s StartRight® program initially served our needs, but current offerings from BMO make it a compelling choice. Evaluate each bank’s perks, weigh the benefits, and align your choice with your financial goals. Embarking on your Canadian banking journey may seem complex, but armed with this guide, newcomers can confidently navigate the intricacies of the Canadian banking system and make informed decisions tailored to their financial objectives.