Banking

Banks and other financial institutions such as “credit unions” and “caisses populaires” are safe places to keep your money.

A bank account lets you:

  • write cheques
  • use automated banking machines (ABMs)
  • receive funds through direct deposit
  • use a debit card for purchases.

You can access many of these services 24 hours a day, seven days a week, at an ABM, or through telephone or Internet banking.

Opening a bank account

In Canada, you have the right to open a personal bank account even if you:

  • do not have a job
  • do not have money to put in the account right away
  • have poor credit rating
  • have been bankrupt

To open a bank account, you can go to the bank in person and show them documents that prove who you are. The documents you show must:

  • be originals (not photocopies)
  • be in good condition
  • not be expired

You can also apply to open a bank account online. For more information, visit any bank in person or online.  

Main types of bank accounts

Chequing accounts let you write cheques and usually include the use of a debit card. You will need one if your employer uses payroll deposit.

If you want to save money, savings and investment accounts are helpful. They have higher interest than chequing accounts. You should ask your bank for more information about savings and chequing accounts.

There are many investment opportunities available in Canada. To learn more about investments, contact your bank or consult the Financial Consumer Agency of Canada (FCAC) website.

Debit cards

You can use your debit card to pay for things in many places in Canada. When you use your debit card in stores, you may be charged a fee.

For tips regarding the use of your debit card, consult the FCAC website.

Cheques

In Canada, you can use cheques:

  • to pay bills by mail
  • to pay larger amounts (for example, your rent)
  • where credit cards or direct payments are not accepted

You need to have enough money in your account when you write a cheque. If not, the cheque might be returned to you for non-sufficient funds (NSF). Your bank will charge you a fee.

Your bank may apply a “hold” (a waiting period) on money you deposit by cheque. If you need to get your money sooner, you can speak with your bank to see if they can shorten the waiting period. You can also ask your employer or other organizations to deposit funds directly into your account. This way, no hold will be placed on the funds. If the cheque is from a bank or other financial institution located outside Canada, the cheque can take much longer to clear. Foreign cheques are often held for 30 days.

You have a right to cash a cheque from the federal government free of charge at any bank. You can also cash it at bank branches where you are not a customer, as long as the cheque is for $1,500 or less and you show them documents that prove who you are.

Other common types of cheques are:

  • Post-dated cheques: These are cheques that have a future date written on them (they are usually used to pay for rent). Post-dated cheques cannot be cashed until the date that is written on them, and you can cancel cheques that have not been cashed by calling your bank.
  • Certified cheques: These are cheques that have been guaranteed by your bank.

Credit and loans

Getting credit means that you borrow money to buy something now and pay it back later with interest. Interest is a fee charged for borrowing the money. Interest rates can be high, so you should be very careful how you use credit.

Credit cards

Credit cards can be very useful. You will probably save money and better manage your finances if you know how your credit card works.

Financial institutions offer many types of credit cards. To compare the features and costs of different cards, use the FCAC’s Credit Card Selector Tool.

Before you make your final choice, make sure you know and understand all the terms of your credit card, including:

  • the interest rate you must pay on purchases, cash advances and balance transfers
  • the manner in which interest is calculated
  • the annual fee and other applicable fees
  • the grace period (the number of days by which you can be late with a payment)
  • the minimum monthly payment
  • the consequences if you make your payments late
  • the other features, such as introductory offers
  • the manner in which your payment will be applied
  • the way you can proceed to make a complaint if you have a problem with your credit card

Applying for a credit card

You can apply for credit cards at most banks either online or in person. Credit cards let you spend money on credit and be billed for it within a month. If you pay the full amount back by the due date, you will not be charged interest. If you use your credit card for cash advances, you will be charged interest starting on the date you withdraw the money and continue to be charged interest daily until you pay off the entire cash advance amount.

Personal bank loans

Personal bank loans can help you manage payments such as:

  • post-secondary education
  • car
  • home renovations

Before signing a loan agreement, make sure you clearly understand your duties when it comes to:

  • late or missed payments
  • co-borrowing
  • payment of fees
  • interest rate

The FCAC website has more information on personal loans.

Lines of credit

A line of credit lets you borrow money as needed, up to a maximum credit limit. You are charged interest from the day you withdraw money and until you pay back the loan in full.

Credit reports and scores

In Canada, a credit-reporting agency collects information whenever you:

  • take out a loan
  • use a credit card
  • take advantage of a “buy now, pay later” offer

This becomes part of what is called your credit history. It includes information about whether or not you make your payments on time, and how long it takes you to pay back money you have borrowed.

Having a good credit history and credit score is important. Banks and other financial institutions usually check your credit history and score when deciding whether or not to give you a loan or credit. Landlords may use your credit history to decide whether or not they will rent to you. If your credit history or score is poor, a lender may refuse to give you a loan or you may have to pay a higher interest rate.

One of the ways to start building a credit history is to get a credit card. However, to maintain a good credit history, make sure to always pay your bills in full and on time, including rent, utilities, cable and insurance premiums.

The FCAC website has more information on credit reports and scores.

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