Opening a Canadian bank account should be one of the first things done by newcomers. A bank account is a great tool for managing your personal finances and saving for the future. There are many banking options available so this may be overwhelming for newcomers. Continue reading to learn more about the basics of Canadian banking.
Recommended webinar: Financial Literacy for Canadian Newcomers
Opening a Bank Account
Everyone residing in Canada is entitled to open a bank savings account as long as you have the required identification. As a resident, you have the right to open a bank account regardless of your credit status, and even if you have gone through bankruptcy or are unemployed. In addition, you do not need to have a job or immediately put money in the account.
Opening a Canadian banking account is as simple as going to the bank and providing acceptable forms of identification. You will not need a Social Insurance Number (SIN) to open a bank account unless you are opening an account that can earn interest. In this situation, your SIN is required for tax purposes. Contact your preferred financial institution to find out if there are other ways to open an account.
Choosing a bank
Choosing your Canadian banking institution can come down to many factors. Assess your current situation and choose the bank that fits your lifestyle the best. Some factors that may sway you can include bank fees, transaction limits, ease of mobile banking, or even something as physical proximity from your home.
All bank accounts have their own unique advantages and potential fees. Generally speaking, account types with more benefits will have higher fees or required balance to maintain the account without penalty. Compare your options carefully before deciding on your bank and account type.
Chequing vs. Savings Account
Understanding your financial goal will help you determine the need for a chequing or savings account.
A chequing account will allow you to receive payments and transfer funds seamlessly for bills, essentials, and all other purchases. Another thing to note with this type of account is that you can freely deposit and withdraw money anytime. Chequing accounts usually do not earn interest.
On the other hand, a savings account can help you achieve your savings goals, like buying a new vehicle or paying a down payment on your first home. This type of account is ideal for the money you won’t need to access on a daily basis. Savings account balance can earn interest over time as well. Some saving accounts may require an initial deposit, while others may have a minimum balance requirement to avoid paying fees or to take advantage of better rates.
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