You’ve made the decision to come to Canada to study as an international student. Now what?
Like many international students, managing finances may be at the top of your list.
We all know that between rent, food and ‘just living’ expenses, savings can disappear quickly. This is true for students – especially international students, with higher tuition fees, currency exchange, and the necessity of temporary accommodation (living far from home), it all adds up.
To make the most of your student life and academic career – with the money you’ve got – you have to know some basic Canadian finance. Understanding banking in Canada — from opening an account, to budgeting and using debit and credit cards — is a real advantage.
|Learn the basics of finance in Canada and get essential resources as well as information you can rely on to make confident financial decisions. Take charge of your finances by downloading the International Students Finance Guide now.|
Types of bank accounts in Canada
One of the first things many newcomers do is open a Canadian bank account. This will allow you to transfer money, and if needed, will be very useful as proof of income when renting your first apartment. The two most common types of personal bank accounts in Canada are a chequing account (daily access to your money, lots of transactions) and a savings account (higher interest on the money you put aside for the longer term).
A chequing account is designed for day-to-day banking, making purchases and paying bills: you can set up your account so that recurring payments like rent and utilities to come out automatically. Flexibility is the key with this type of high activity account, as you can deposit and withdraw your money at any time, use your debit card to pay for things and transfer money electronically. However, note that chequing account balances do not usually earn interest.
A savings account is the ideal place for the money you don’t need to access every day. In this type of account your balances earn interest and it offers you stability knowing you have your money in a safe place. You can access your money easily when you need it – for emergencies or unexpected expenses.
As an international student, you may want to have both so you can enjoy higher interest on your savings account and the often unlimited number of transactions in a chequing account.
5 tips to get you started: from banking to budgeting
- Organize your banking before you arrive in Canada
There are things you can do from home to help you be better prepared for a successful student life in Canada. Speak with a financial advisor to start your application for a Canadian bank account before you leave so you can enjoy benefits like:
- The ability to easily transfer money from your home country to Canada
- Immediate access to your money when you arrive in Canada
- Nationwide access to your account, regardless of which province or city you decide to make your new home
- Understand the types of accounts available and pick the one that’s right for you
There are different types of accounts available. The features and benefits can vary, so check out student accounts to see which one best fits your needs. Here are some key considerations:
- Monthly fees: A student account may have monthly fees or NO monthly fees
- Unlimited debit transactions versus a set number of free transactions
- International money transfers
- Interac e-Transfers within Canada
- Minimum or no minimum balance required
- Make a budget: Figure out your monthly expenses
Where you choose to live and study, the kind of accommodation you select (on campus housing, off-campus rental, shared accommodation), plus transportation, food, and entertainment, all affect your monthly expenses. Build your monthly budget by adding up these expenses against the amount of money you have available. Use this budget calculator to make it easier.
- Get your first Canadian credit card – and use it!
Start building your credit history and credit score in Canada with a student credit card. If you need a loan or mortgage in the future, you’ll enjoy more favourable terms (like a better interest rate) if you have a Canadian credit history and a good credit score. Here is some information to help you understand this important topic:
- Know the best ways to pay.
According to a recent Bank of Canada article, only one in three purchases are made using cash, or just 15% of the total value of purchases. The most popular ways of paying for everything from a cup of coffee to a convertible couch are debit and credit cards. In Canada, nearly everyone has at least one debit card and around 9 people out of 10 own a credit card.
Understanding the basics of banking in Canada will allow you to budget and plan your purchases thoughtfully, so you can make the most of your student life and academic career in Canada knowing your finances are in good shape. Now, focus on your studies.