Banking in Canada is unique, and for newcomers to the country, understanding the financial landscape can be bewildering. Any newcomer to Canada can easily get perplexed by the intricacies of everyday banking as it can differ from their home country in many ways.
To assist newcomers in navigating this learning curve, I’ve compiled a comprehensive guide to banking in Canada, covering the basics of how banking works in the country, providing recommendations for the best bank for newcomers to Canada in 2023, and guiding you through the process of opening a new bank account.
You will read about:
Banks in Canada
Big 6 Banks: Canada boasts a handful of prominent, well-established banking institutions, known as the “Big 6 banks.” These institutions dominate the Canadian banking landscape and include:
- Royal Bank of Canada
- TD Bank
- CIBC (Canadian Imperial Bank of Commerce)
- Scotia Bank
- Bank of Montreal (BMO)
- National Bank of Canada
All-Digital Challenger Banks: In recent years, a growing number of digital and challenger banks have emerged in Canada, aiming to disrupt traditional banking norms. Most of these are online-only options and include:
- Simplii Financial
- EQ Bank
- NEO Financial
- Tangerine
- Koho
Comparing Online and Traditional Banks in Canada
Canada also features credit unions, which offer services similar to banks. These credit unions are community-focused and can be viable options for banking services.
The Best Bank for Newcomers to Canada
Criteria for Selection
When evaluating the best bank for newcomers to Canada, we consider key features to ensure that your transition to the Canadian banking system is seamless. Here are the criteria:
- No Monthly Fees: The account must not have monthly fees or impose unreasonable transaction restrictions.
- Ease of Setup: Opening the account should be a quick and straightforward process.
- Credit Card Inclusion: The account should guarantee you a credit card. Building a Canadian credit history is vital for various purposes, including securing a mobile phone contract, loans, car leases, and rental agreements.
Best Bank for Newcomers to Canada
Based on the criteria outlined above, here are our top recommendations for the best banks for newcomers to Canada in 2023:
- CIBC Welcome to Canada Package
- Eligibility: Received landed immigrant status in the last 5 years
- Fees: No monthly fees for two years
- Credit card: Yes, range of cards available to newcomers
- Welcome offers: $350 cash offer if certain criteria are met
- Click Here to check out the features
- Simplii Financial No-fee chequing account
- $400 sign-up bonus
- Unlimited free debits
- No-fee money transfer
- Access to 3,400+ CIBC ATMs
- No minimum Balance Requirements
- *For a limited period, Simplii is offering newcomers a chance to earn up to $1,300 annually when they open a new account. Also, Simplii is offering an Interest rate of upto 6.00% per year for a limited time.
- Click Here to check out the features
- EQ Bank Chequing Account
- Hybrid account i.e. Chequing and Savings account features in one
- High rate of Interest – Earn upto 3.00% rate of Interest. One of the highest rates among all the banks
- NO MINIMUM BALANCE
- Get $20 on opening a new bank account.
- Easy account opening process – Completely online and can be done in 5 minutes.
- Click Here to check out the features
- KOHO Chequing Bank Account
- KOHO is a fintech company providing an all-in-one spending, saving, and cashback-earning account.
- Upto 4.50% Interest on your funds.
- With a free KOHO account, you can earn 0.50% cash back on all purchases and enjoy unlimited debit transactions and e-Transfers.
- Click Here to check out the features
- National Bank Newcomers
- Eligibility: All newcomers who arrived in Canada within the last 5 years
- Fee: No monthly fee for up to three years (conditions apply)
- Credit card: Yes, range of cards available to newcomers
- Welcome offers: Savings from no monthly fee for three years
- BMO NewStart Program
- Eligibility: Permanent resident or foreign worker who arrived in Canada within the last 5 years
- Fee: No monthly fees for one year
- Credit card: Yes, range of cards available to newcomers
- TD New to Canada
- Eligibility: Permanent Resident or Temporary Resident of Canada for 5 years or less
- Fee: No monthly fees for one year
- Credit card: Yes, range of cards available to newcomers
- Welcome offers: $300 Amazon gift card if certain criteria are met
- RBC Newcomer Advantage
- Eligibility: Newcomers and international students to Canada who arrived within the last 5 years (12 months for credit cards)
- Fees: No monthly fees for one year for some accounts
- Credit card: Yes, range of cards available to newcomers
- Welcome offers: Currently, no significant perks for opening an account
- 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, range of cards available to newcomers
- Welcome offers: Currently, no significant perks for opening an account. Earn SCENE® or Scotia Rewards program points for transactions.
Note: The bank you choose may depend on your specific needs and location, as well as any promotional offers available at the time of opening your account. It’s advisable to consult with the selected bank for the most up-to-date information.
How to Open a New Bank Account in Canada
Opening a bank account in Canada is a straightforward process, and Canadian law allows you to do so even if you don’t have a job or funds to deposit. Here’s how to open a new bank account in Canada:
- Contact the Bank: Reach out to the bank you’ve chosen before your arrival in Canada to schedule an appointment. You can select a branch close to your intended residence.
- Prepare the Required Documents: When you arrive at the bank for your appointment, ensure you have the necessary documents, which typically include your passport, Confirmation of Permanent Residency document (or other immigration document), and Social Insurance Number (SIN).
- Additional Requirements for Credit Cards: If you plan to apply for a credit card, you may need a letter from your employer, depending on your status in Canada.
- Visit the Bank: Attend your appointment at the selected branch. The bank staff will guide you through the account opening process, set up your online banking, and provide your new bank card.
And that’s it! Opening a bank account in Canada is one of the simpler tasks when establishing yourself in the country.
Banking in Canada Basics
1. Banking in Canada Isn’t Free: In Canada, it’s the norm to pay for your everyday banking services. Most accounts come with monthly fees, which are often waived if your account maintains a minimum daily balance. However, the required balance can be quite substantial, often in the thousands of dollars range.
2. Cashless Transactions: Canada is well-equipped for cashless transactions, with Visa, Mastercard, and American Express widely accepted. Contactless payments, without needing to enter your PIN, are also prevalent.
3. Use of Cheques: Cheques, bankers drafts, and void cheques are still commonly used in Canada, especially for larger transactions.
4. Branch Banking: Despite the prevalence of online banking, some banking activities still require in-person visits to branches.
5. Transaction Limits: Many bank accounts in Canada have limits on the number of free transactions each month. Be aware of these limits when choosing a bank account to avoid extra charges.
Understanding Key Terms
Chequing Account: This is your everyday bank account in Canada, used for daily financial transactions, such as receiving your salary, paying bills, and withdrawing money from ATMs.
Interac: The Canadian debit card system, equivalent to Visa Debit in other countries. Payment in stores can be categorized as either credit or debit, depending on the network.
Interac e-Transfer: An online bank transfer method that uses email addresses as unique identifiers. Users link their email addresses to their bank accounts to send and receive money securely.
Routing Number and Account Number: Bank accounts in Canada are identified by three sets of numbers: Institution Number, Branch Number or Transit Number, and Account Number. These numbers are used for various banking transactions.
Online Bill Payment / Pre-authorized Bill Payment: Methods for paying bills or organizations through online banking. It differs from Interac e-Transfer, which is used for person-to-person transfers.
Direct Deposit: Electronic payments, like salary deposits, made directly into your bank account.
Bank Draft: Similar to a cheque but guaranteed by the bank, providing assurance to the payee that they will receive the funds.
Void Cheque: A cheque with “VOID” written across it, used to share account details for setting up direct deposits.
ATMs in Canada
Canada offers a wide network of ATMs for cash withdrawals. Most major banks have their ATMs, which typically allow free withdrawals for their customers. Privately-owned ATMs may charge additional fees, so it’s best to avoid them when possible.
Credit Unions in Canada
Credit unions are an alternative to traditional banks, offering similar products and services to everyday customers. They are owned by their members and operate as nonprofits, reinvesting earnings back into the business and the community.
Conclusion
Choosing the best bank for newcomers to Canada is an essential step in your settlement journey. The right bank can help you build a solid financial foundation and navigate the Canadian banking system with ease.
Consider your specific needs, location, and any current offers when making your decision. And remember, building a good credit history is crucial in Canada, so take advantage of the credit card options available through your chosen bank.
If you have any questions or need further guidance on banking in Canada, feel free to leave a comment below. Welcome to Canada, and best of luck with your financial journey!
Best Bank for Newcomers to Canada – Frequently Asked Questions (FAQs)
1. What are the Big 5 banks in Canada?
- The Big 5 banks in Canada are Scotiabank, TD Canada Trust, CIBC (Canadian Imperial Bank of Commerce), Royal Bank of Canada (RBC), and Bank of Montreal (BMO).
2. Are there alternatives to traditional banks in Canada?
- Yes, there are online-only challenger banks and credit unions in Canada that provide alternatives to traditional banks.
3. Is banking in Canada free for newcomers?
- No, most banks in Canada charge monthly fees for their everyday banking accounts. However, some offer fee waivers for a limited time to newcomers.
4. What is the purpose of a chequing account in Canada?
- A chequing account in Canada is used for everyday financial transactions, such as receiving your salary, paying bills, and withdrawing money from ATMs.
5. What is the Interac network in Canada?
- Interac is the Canadian debit card system, equivalent to Visa Debit in other countries. It’s used for in-store debit card payments.
6. How can I build a credit history in Canada as a newcomer?
- Obtaining a credit card through a Canadian bank is an effective way to start building a credit history in Canada.
7. Can I open a bank account in Canada before I arrive?
- Some banks, like HSBC, may allow you to open a Canadian bank account before your arrival. Check with the bank for specific requirements.
8. What documents do I need to open a bank account in Canada?
- Generally, you’ll need your passport, Confirmation of Permanent Residency document (or other immigration document), and Social Insurance Number (SIN). Additional requirements may apply for credit card applications.
9. How do I choose the right bank for me in Canada?
- Consider factors such as account fees, ease of setup, and credit card offerings when selecting the bank that best suits your needs and location.
10. Can I use a foreign bank account in Canada? – While you can use a foreign bank account in Canada, it’s advisable to open a Canadian bank account for easier access to local services and to build a Canadian credit history.
11. What is the significance of a credit history in Canada? – A good Canadian credit history is essential for various financial transactions, including securing loans, rental agreements, and mobile phone contracts.
12. Are there specific banking options for international students in Canada? – Yes, many Canadian banks offer banking packages designed for international students, which may include no monthly fees for a limited time and credit card options.
13. Can I use contactless payments in Canada?
Yes, Canada is equipped for contactless payments, and major card networks like Visa, Mastercard, and American Express are widely accepted.
14. Which Canadian bank is best for students?
Determining the best Canadian bank for students depends on individual preferences and needs. However, some banks, including RBC, CIBC, TD Canada Trust, Scotiabank, and BMO, offer dedicated student banking packages with various benefits. It’s essential to compare these options based on factors such as fees, accessibility, branch locations, ATM networks, and additional perks before deciding which bank is best for your student needs.
15. Is RBC or CIBC better for students?
Choosing between RBC and CIBC for student banking depends on your specific requirements and location. Both banks offer dedicated student accounts with various benefits. To make an informed decision, compare factors such as monthly fees, ATM access, branch locations, and any special promotions or perks available at the time.
16. What are the benefits of a student account with CIBC?
CIBC offers several benefits with its student accounts, which may include:
- No monthly fees for students (subject to specific conditions).
- Access to a range of credit card options to help build credit history.
- A wide network of ATMs for fee-free withdrawals.
- Convenient online and mobile banking services.
- Opportunities to earn rewards or cash bonuses through special promotions (varies by offer and region).
17. Which is the best bank to open for students?
The best bank for students in Canada can vary depending on individual needs and preferences. Common choices include RBC, CIBC, TD Canada Trust, Scotiabank, and BMO, as they offer dedicated student banking packages. To determine the best option, consider factors like monthly fees, ATM accessibility, branch locations, and any unique benefits offered by each bank.
18. Is CIBC free for students?
CIBC often offers student accounts with no monthly fees for eligible students. However, these fee waivers typically come with specific conditions, such as maintaining a minimum balance or being enrolled in a full-time educational program. It’s essential to review the terms and conditions of CIBC’s student accounts to understand the fee structure and eligibility criteria.
19. Is there a monthly fee for students at CIBC?
While CIBC may offer student accounts with no monthly fees, the availability of fee-free accounts may depend on the specific account type and eligibility criteria. Some CIBC student accounts may require maintaining a minimum balance or meeting other conditions to waive monthly fees. It’s advisable to inquire about the fee structure when opening a student account with CIBC.
20. How do I get $350 CIBC?
CIBC occasionally offers promotions that provide cash incentives to new customers. To get a $350 cash bonus or similar offers, you typically need to meet certain requirements, such as opening a specific type of account, setting up direct deposits, and maintaining the account for a designated period. Click here to check out the latest offer.
21. How do I avoid CIBC monthly fees?
To avoid monthly fees on a CIBC account, you can typically meet one or more of the following conditions:
- Maintain a Minimum Balance: Some CIBC accounts require you to maintain a specific minimum balance in your account to have the monthly fees waived.
- Enroll in a Student Account: If you’re a student, you can often open a student account with no or reduced monthly fees. Ensure you meet the eligibility criteria.
- Set Up Direct Deposits: Some CIBC accounts may waive monthly fees if you set up regular direct deposits into your account, such as your salary or government benefits.
- Combine Accounts: CIBC may offer fee waivers if you have multiple accounts or products with them, such as a chequing account and a savings account.
- Check for Promotions: Keep an eye out for special promotions or offers that temporarily waive monthly fees for new customers.
