How to open a financial account in Canada?

Banks and credit unions propose in Canada tax-free and high-interest savings accounts, for students, joint accounts, individual retirement accounts, bank accounts for kids and ones in US dollar, etc. How not to get lost in this variety of offers and choose the account that will suit you best? Bankchart.ca helps you take the right steps.

Summary

  1. Step 1. What is a personal current account? What are the kinds of such accounts?
  2. Step 2. How to compare individual financial accounts?
  3. Step 3. How to open a bank account?
  4. Step 4. Features of opening some types of banking accounts
  5. Findings

Present man is difficult to represent living without an account at a financial company. It assists in paying for commodities and services, whether it’s a payment for the Internet, rent, groceries or dental services; and also to pile up funds for a particular purpose, for example, a holiday trip, and to get some repayments, like social. Banks and credit unions propose in Canada tax-free and high-interest savings accounts, for students, joint accounts, individual retirement accounts, bank accounts for kids and ones in US dollar, etc. Such accounts are proposed by both Canadian banks (TD Bank, Scotia, RBC, CIBC, BMO) and other financial organizations (Coast capital, Western Union). How not to get lost in this variety of offers and choose the account that will suit you best? Bankchart.ca helps you take the right steps.

Step 1. What is a personal current account? What are the kinds of such accounts?

 An individual financial account is an account, opened at a financial organization for transactions or savings goals. In Canada, you can open a current account in banks, trust companies and credit unions.

When opening a banking account, you should ask the following questions:

  1. What operations are expected to be done?
  2. What are the account tariffs?
  3. What is the level of the interest rate?
  4. Does deposit insurance protect future savings?
  5. How many branches and ATMs does the financial organizations have?

Depending on the opening goal there are such types of a banking account:

  1. checking – is a day-to-day no interest account for making transactions (paying for invoices, making purchases) and withdrawals (at ATMs, branches)
  2. high interest saving accounts – is an interest-bearing account for saving for a specific purpose, like automobile, the Christmas trip or repairs or to earn interest revenue
  3. foreign currency account – fits for people who have transactions with abroad parties or travel a lot

Depending on a customer, individual accounts can be:

  • basic - is a financial account for grown Canadian nationals
  • individual retirement account - is developed to get social benefits, for example, a pension or to pile up for old age
  • for students – is an inexpensive account for full-time students. They usually have some perks but also limits for their clients
  • for kids – is an investment account for children or their parents to save up money for education or other goals and to teach kids to manage a banking account
  • for expats - for foreigners who come to Canada for education or work
  • joint banking account – suits you most if you are planning to share expenses or to pile up money for a joint goal with your friends or relatives. Such an account allows its owners to do such operations from the identic account: payments, deposits, withdrawals and other operations

Step 2. How to compare individual financial accounts?

You should do research and get sure that you comprehend all price and non-price parameters of personal accounts before opening. It is also useful to take a copy of a bank agreement and to investigate it.

The important account parameters are:

  • PRICE:

Monthly commission – can be zero for pensioners and students. Also, the fee can be waived for some advertising period, for example, the first three months of servicing and for increased balances, like 3 000 CAD. For all other cases, according to our investigation, the price ranges from 4 to 30 CAD depending on the account limits and perks

Interest rate – is the reward, paid by a financial organization for deposited funds. Canadian banks usually propose no compensation, but some can pay out and its size can depend on your account balance amount

Transaction fees – usually in Canada banks provide a particular amount of free operations per month, but if you exceed the limit a commission will be charged

Withdrawal tariff – commonly varies from 0% to 5% of the operation amount and depends on the method and the place of the cash withdrawal: by a check or a card and in Canada or abroad. The smallest fee is for withdrawals at your bank ATM and the largest at another bank ATM abroad

Foreign transaction fee – is charged when converting or sending money abroad and it is essential for some categories of clients, like travellers

  • NON-PRICE:

Minimum balance – is the minimum sum which you must keep on your account. Usually, it is not established, but it can be set if the bank pays interest revenue

Free transactions – financial organizations can provide a particular amount of free operations monthly

Requirements to a customer – Canadian banks can set limits for a potential client’s age, earnings, residency, status and others

Financial organizations must inform you in a written way about a new tariff or its increase at least thirty days before the changes by:

  • information in their branches
  • on its site
  • at ATMs

You can also agree to receive such information by mail. If the bank didn’t inform you about such changes, you can complain to the Financial Consumer Agency of Canada.

Step 3. How to open a bank account?

It is rather simple to open a financial account in Canada. Unlike credit ones, in such a case you can open an account even if you are jobless, have no money to deposit into the account or even are bankrupt.  Your credit history can be checked by the financial organization, but it influences not on the approval decision but on the future withdrawal limits and the account hold policy.

Usually, you can make the application online, for example, if you are an immigrant and are going to are in Canada, but you still have to visit the financial organization to sign an agreement. When applying to a bank, you are required to pass an identification which you can go through in several ways. The basic list of approval documents includes the following ones:

  • passport
  • birth certificate
  • driver’s licence
  • social insurance card
  • old age security card
  • provincial or territorial health insurance card
  • —Āertification of naturalization
  • permanent resident card
  • certificate of canadian citizenship
  • certificate of Indian status
  • immigration, refugees and citizenship canada form IMM 1000, IMM 1442, or IMM 5292

Commonly it is required to provide several documents from the above list to be identified in a financial institution. But if you have only one of them you should also present one more paper from the additional list:

  • foreign passport
  • employee ID card
  • debit or credit card with your signature and name on it

When applying to a bank, its manager must provide you all detail information about the current account:

  • all servicing and transaction commissions
  • interest rate on balance
  • how you will be informed about the tariffs changes
  • provide you with a copy of the account agreement

If you change your decision, you can close the account within fourteen working days after opening without any fees by the financial organization.

Seldom the bank can refuse you to open a personal account. It happens when there are mistakes in the provided data, you interfere to check your ID or you have a history of illegal or fraudulent activity or are suspected that you will conduct such operations. In such a case the financial organization must provide you with a written refusal with its reason on the letterhead.

Step 4. Features of opening some types of banking accounts 

If you are a non-resident, student, senior or desire to open a savings account for kids – there can be features in the accounts conditions and requirements to customers.

For instance, if you are an immigrant, you can open a current account with a traveller company or immediately after arrival to Canada. The first method is more comfortable because such a firm will assist you in communicating with a financial organization and can give you some other beneficial attendance, like:

  • obtaining the visa
  • housing search
  • employment
  • buying a SIM card

The cost of such services depends on the traveller company and the list of the services provided. You can do it yourself but be prepared to provide additional documents, like certification of naturalization, immigration, refugees and citizenship Canada form IMM 1000, IMM 1442, or IMM 5292.

Canada is a popular country for education and many Canadian banks propose individual accounts for full-day students. As a rule, such accounts have zero servicing fee and the interest rate on balances. A lot of student financial plans have both functions of making transactions and savings up funds. As a rule, a debit card is attached to these accounts, whereas issuing a credit card may be unavailable or with a small limit. Also, such a student plan can include some quantity of free operations per month.

If you are a pensioner, you can open a banking account for seniors. The maintenance fee on such accounts by our research ranges from 0 to 10,95 CAD. Banks can establish an interest rate on balances or charge nothing. The minimum balance is commonly increased and varies from 0 to 3 500 CAD. Such tariffs plans usually have a particular amount of free operations monthly or even unlimited quantity.

Youthsaver banking accounts are similar to retirement accounts, but are provided for parents or their kids to save up money to ensure the future of children, for example, to accumulate a down payment for buying a house on credit. Such tariff plans can have educational programs for teaching children to manage money and use banking products.

After opening a current account, Canadian banks may offer you a credit card or line of credit. If you agree, you can be asked to give some security in the form of a deposit or surety. Consider that such products are not free. You will to pay a high interest rate, servicing and transaction fees. Therefore, do not arrange loan products if you do not need borrowed funds

Before opening a joint account, you should talk with its other owners. Make sure that you have a common account management vision. Learn carefully the account agreement and ask the bank manager about joint account management rules and what to do in non-standard situations, for example, if the co-owner dies.

Findings

Think about your goals and needs to choose the financial account that suits you best. Examine the conditions of the offers using the sites of banks or financial aggregators. And even better - do not be lazy to go to the office of your favorite company and get a copy of the contract. Carefully review all price and non-price parameters of the individual account. Prepare documents for opening an account from the primary list that are convenient for you to provide. After opening the account, connect to online and SMS banking and set up automatic payments.


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