If you’ve recently moved to Canada: welcome!
As a new resident, there are many things you have to consider, but right at the top of your list should be getting yourself established financially in your new country.
Here’s how to get started:
Get a Bank Account
Why?
You will need a Canadian bank account for many aspects of life in Canada, including paying bills and getting paid.
But just as importantly, it’s necessary to get your Canadian credit profile started.
All newcomers to Canada start their credit profile from scratch, regardless of their credit score or financial behaviour in any other country.
And it takes time to build up a credit profile; a positive profile is necessary to access the best rates and terms for products like credit cards, loans, and so on.
Opening a Canadian bank account is the vital first step in this journey.
What?
There are two basic types of bank accounts in Canada: chequing, and savings.
Start with a chequing account; this is known as a current or a debit account in other countries, and it will allow you to perform most of the necessary banking you need on a day-to-day basis.
It will also provide a debit card that can be used in stores. A savings account, on the other hand, is useful for saving and growing money over the longer term.
Some banks have specialized banking ‘packages’ for new immigrants that include basic accounts as well as some perks, so keep an eye out for those.
Where?
Canada has a large financial marketplace, dominated by five big banks: the Royal Bank of Canada (RBC), Toronto Dominion (TD), Scotiabank, the Bank of Montreal (BMO), and the Canadian Imperial Bank of Commerce (CIBC).
Together these banks account for the majority of Canadian banking business, but that doesn’t mean other options don’t exist.
There are over 80 banks in operation across the country, with smaller, regional, digital-only and credit union options all available.
To find the right bank for you, consider what you need it for, how you intend to use it, where you’ll be living, and the fees being charged, as both fee and no-fee options exist.
This tool from the Financial Consumer Agency of Canada is helpful.
Canada has one of the world’s safest financial systems, and all financial institutions operating in the country are heavily regulated.
When?
Although foreign credit cards work in Canada, foreign exchange fees quickly stack up, so it pays to open a local account as soon as possible.
Some institutions even allow you to open an account before you immigrate; check with your chosen provider if this is an option.
How?
To open a bank account in Canada you need, at a minimum, I.D. and proof of your right to live in Canada (e.g. work visa, student visa, permanent resident card).
Your exact status in the country may dictate which financial products you can access, and their relevant limits.
You do not need a job to open a Canadian bank account, and you do not need a Social Insurance Number (SIN) to open a basic chequing account; this is only required for interest-bearing accounts.
With some institutions, you can register as a new customer online; with others you will need to make an appointment and go into a branch.
All Canadian banks offer services in both English and French, and many also offer customer support in other languages.
Build Your Credit Profile
Why?
A good credit score not only means that you can access loans, lines of credit, credit cards, and more, but also that you qualify for competitive interest rates.
A good credit score can mean the difference between financial freedom and financial servitude.
Unfortunately, credit does not transfer between countries, so when you arrive in Canada you will have to start from scratch.
What?
Canadian credit scores range from 300 (very poor) to 900 (excellent), and you need a score of 650 or above to access most basic credit products, including:
- Credit cards
- Car loans
- Personal loans
- Title loans
- Student loans
- Mortgages
- Credit cards
- Lines of credit
Your credit score can also affect your ability to rent a home, get a job, and access insurance. It’s a mark of how financially trustworthy you are, so don’t discount its importance!
Where?
Almost all aspects of your financial life count towards your credit profile, so there is no single place that you must focus on when building your credit.
All bills and financial obligations should be paid on time.
If you are looking to start building credit as a newcomer, talk to your chosen bank for help.
They may be able to offer products that can assist, like a secured credit card.
When?
It’s wise to start the credit building process early, before you necessarily need a loan or credit card.
This is so that when you do need credit of any kind, you will already have a profile established; and the longer your credit history is, the better.
How?
Starting from zero as a new immigrant means that every financial action you take in your new country matters. You can start building a positive credit profile by:
- Immediately opening a bank account
- Making sure your bills (such as utilities) are in your name
- Getting a cell phone
- Paying all of your bills on time
- Applying for a new credit item (such as a secured credit card) and then paying it off diligently and on time; many banks allow new immigrants to open a low-limit, secured credit card to help them build their credit profile, some will even offer a low-limit unsecured card
- Avoiding multiple new credit applications at once
With a local bank account and positive credit profile in hand, you will begin to be able to access all of the same products and services that long-term Canadian residents enjoy!
