A Very Brief Overview of the types of Bank Accounts in Canada and what that means for you
In Canada, banks are secure and profitable. The industry is highly regulated by the government – which is a good thing for consumers. All banks adhere to strict rules and each offers comparable products and services. There are five major banks in Canada, along with smaller financial firms like trust companies and credit unions. All fall under the umbrella of ‘banking’.
|Canada’s Five Major Banks|
|Royal Bank of Canada (RBC)|
|Toronto-Dominion Bank (TD)|
|Bank of Nova Scotia (Scotiabank)|
|Bank of Montreal (BMO)|
|Canadian Imperial Bank of Commerce (CIBC)|
Opening a bank account in Canada:
Opening a bank account in Canada is quite simple once you arrive in Canada. All you need is proper personal identification (see list below) and you can begin your Canadian banking experience and access accounts and services.
|Identification you can use to open an account|
|A driver’s license issued in Canada|
|A Canadian or foreign passport|
|Permanent Resident card|
|Immigration Canada Form IMM 1000 or IMM 1442|
|Note: Allowable I.D. may vary slightly per province|
Opening a bank account is one of the first things you should do when coming to Canada.
You can use it to transfer funds from home, show proof of funds on arrival, and you will need a bank account to rent an apartment, buy a home or lease a car (among other services). Let’s review the two main types of bank accounts in Canada:
Types of bank Accounts in Canada
There are two main types of bank accounts in Canada that serve distinct purposes: chequing and savings. Basically, your chequing account is the account you use to pay bills, make purchases, transfer funds etc., while your savings account is, as the name implies, where you keep your savings. Here is a slightly more detailed breakdown.
Your chequing account is designed for day-to-day use. This is where you keep money that you’ll use for daily transactions, making purchases, and all of your recurring monthly expenses. You could receive printed cheques and cheque-writing privileges. Typically, with your chequing account you’ll earn low or no yearly interest rate on deposits. This is the first account you should open.
Chequing Account Features:
• In-branch and ATM deposits, withdrawals, debit card transactions, and money transfers between accounts
• Online services for transactions, and general account management and tracking
• Pre-authorized payments (you can set up your bills to be paid automatically)
• Fees for account usage (these will vary depending on services and transactions)
As mentioned, your savings account is not intended for regular, everyday spending transactions.
It’s ideal for money you don’t need daily access to. This is literally where you save for a rainy day.
Savings Account Features:
• Ideal for saving money for an emergency fund, special purchases, and longer-term needs.
• Easily access your money whenever you need it
• An interest rate that brings modest earnings based on the sum of money in the account
• Service fee charges if you do not maintain a certain average monthly balance of funds
• Typically lower transaction fees than chequing accounts.
• Online services for bank transactions and account management and tracking.
At Arrive, we are dedicated to helping newcomers achieve career, life and financial success in Canada. Over the following weeks and months we will be focusing on the financial side of the journey, sharing financial tips and information in our weekly blogs, providing handy online tools like a Canadian Expenses Calculator, and hosting highly-informative webinars and workshops. First up, Finances in Canada 101: What You Need to Succeed, a discussion around Personal Finances in Canada.
Arrive is supported by Royal Bank of Canada (RBC). With a 150 year commitment to newcomer success in Canada, RBC goes the extra mile in support and funding to ensure that the Arrive newcomer platform is FREE to all. RBC is the largest bank in Canada* and one of the most respected banks in the world, employing 80,000+ people worldwide.
*Based on market capitalization
Working with RBC, we can help you get your financial life in Canada started – right now.