Canada is becoming a favorable destination for students seeking education. But for international students, some basic information on banking system in Canada is very important.
This article discusses this information in a very basic manner.
When moving to Canada, there are three financial products everyone should have in his/her name:
- Bank account
- Debit card
- Credit card
Opening a bank account
Opening a bank account is first step towards entering into financial system of Canada and is essential for everyday transactions. To open it, simply go to the bank of your choice, preferably near your home or college. You will be asked to identify yourself using your social insurance number and/or passport. It is important to choose your financial institution carefully because the rates for transactions, cheques and other services vary from one institution to another.
Some banks allow remote account opening from your home country.
Several banks offer specific services to international students and this includes:
- Scotiabank Student Banking Advantage Plan
- CIBC Advantage for Students Account
- Royal Bank of Canada (RBC) Student Banking Account
- The Toronto Dominion Bank (TD Bank) Student Checking Account
In Canada, when you open a bank account, you will be typically offered a debit card for free which is directly linked to your bank account. You have to understand that there is a difference between a debit card and a credit card. Each one has its own functioning and features which is not always easy for the newcomer to grasp especially the students.
A debit card is mainly used to pay for purchases in stores (grocery, stationary, and others). And the amount spent is debited from your checking account the same day. You can also use your debit card to withdraw cash at ATMs (with a fee if you withdraw at a different financial institution). However, you will not be able to use it to make online purchases on the Internet. In this case, you will need a credit card. In many countries like India, you can make online purchase even using a debit card but this is not the case with most of the banks in Canada.
This is the most important financial product everyone moving to Canada should have as it helps in building the credit score which is a gateway to future financial needs in the country. Note that, just by having a bank account and debit card does not help in building a credit history.
Credit cards are widely used in Canada and also in many other countries. However they are not always linked to your bank account (like a debit card) but with a credit account from another organization. You will receive a monthly statement of the card account and the payment due date. You have no obligation to pay the full amount, but a minimum amount must be paid each month. The amount due is accompanied by fairly high monthly interest rates (between 9.9% and 19.9%) until the amount is fully repaid.
Major retail chains and some oil companies offer their own credit cards. Since the application for a credit card often involves historical credit analysis in Canada, it can be difficult for newcomers, for whom a “credit rating” does not exist.
Some financial institutions are more accommodating than others in this regard and some also offer secure deposit-guaranteed credit cards for new immigrants. Depending on the credit card choice, interest rates, authorization limits, payment terms and annual fees may vary from one institution to another.
Some of the secured credit cards in Canada are:
- Capital One® Secured Card
- Refresh Financial Secured Visa
- Scotiabank Value® VISA Card
- Home Trust Secured Visa Card
- DCU Visa® Platinum Secured Credit Card
- Peoples Trust Secured MasterCard
So these are the very basic financial products anyone moving to Canada should own. Getting a credit card in Canada should be the most important objective especially when you are planning to stay longer.