AdeolaOpening a bank account in Canada is very straightforward. However, before you decide to open a bank account in Canada, it is advisable to do your research and choose a bank that meets your banking needs while offering financial products at affordable rates.
Why you need a bank account in Canada
It is quite possible to go about your life in Canada without a bank account, however, you’ll find out that a lot of financial transactions that you carry out will require you to have a bank account. For example, you may need a bank account to receive your paycheque from your employer or carry out frequent online banking transactions.
You have the right to open an account even if you do not have a job or do not intend to put in some money immediately, provided you have the required identification.
How can you open a bank account in Canada?
You can open a bank account in person or sometimes, online. Generally, you can open a chequing and/or savings account in a:
- bank,
- credit union,
- caisse populaire
- or trust company.
You will be required to provide proof of identification and other documentation before you can open an account. Usually, there are three different combinations of identification (ID) you may use to open a bank account in Canada. It is important to note that you must use original copies of your identification documents.
What kind of bank account can you open?
The two common types of individual bank accounts in Canada are chequing and savings accounts. Different banks offer different variations of products with similar but different fees, charges, terms, and conditions.
A chequing account is an account that you would typically use for your daily, monthly, and frequent financial transactions such as paying bills, receiving paycheque, and other types of cheques. You would also use a chequing account to transfer money or carry out regular online transactions.
Your savings account, on the other hand, is usually used to save money for different purposes such as building an emergency fund, saving towards a down payment for your house or a new car.
A savings account typically generates interest on your deposits, however, these interest rates are typically low.
Top Banks in Canada
According to World Atlas and Statista, based on assets and market capitalization, the top banks in Canada are:
- Royal Bank of Canada (RBC)
- Toronto-Dominion Bank (TD Bank)
- Bank of Nova Scotia (Scotia Bank)
- Bank of Montreal (BMO)
- Canadian Imperial Bank of Commerce (CIBC)
Other reputable financial institutions in Canada that offer diverse financial products and services are:
- National Bank of Canada
- HSBC Bank Canada
- Laurentian Bank of Canada
- Canadian Western Bank
- ATB
- Desjardins Group
There are financial institutions that offer mostly online banking services and products. Examples of such online banks are Tangerine bank and EQ bank.
Key considerations in choosing a bank account in Canada
When choosing a financial institution to open a bank account, there are certain things to consider. Your banking needs will vary based on your status, either as a newcomer, student, senior, or business owner.
Key factors to consider when choosing a bank are:
Financial Products and services
Financial institutions in Canada provide the basic chequing account and savings account. These accounts meet the basic needs of every individual and the product specifications differ across different financial institutions.
Most financial institutions provide products that meet the specific needs of students, unemployed persons, seniors, or business owners. Before you make a choice, ask a bank representative about the different financial products that the bank offers.
Examples of banking products include regular accounts, debit cards, credit cards, money transfer platforms, etc.
When choosing a bank, it is important to also ask about their financial product offerings such as the number of transactions you can make a month, any overdraft protection, credit card limits and offers, pre-authorized payments, international transfers, telephone banking, amongst others.
Fees and charges
Most financial institutions charge for certain transactions and services. Banking charges can include monthly fees for chequing accounts, ATM fees, money transfer fees, chequebook fees, etc. Always make sure to understand all the associated fees with the bank.
Some banks may waive or reduce banking fees for youths, students, seniors, or newcomers.
Availability and Location
If you always need to visit your bank physically, then the location of the bank, as well as the availability matters significantly. Some banks have operations ongoing for late hours or during the weekend.
Savings rates and options
Generally, you earn interests on your deposits at the bank. Putting your money in a savings account will usually earn you higher interest than a general chequing account. However, the interest rates you get on your money in a savings account are still relatively low. For this reason, most banks offer high interest savings account, promising higher savings interests. A high interest savings account is generally referred to as a HISA.
Before you choose a bank, make sure to ask about their savings rates and savings account options.
Security
You want to use a bank that gives priority to security. Most financial institutions provide security features that allow you to instantly lock or unlock your credit card if it gets missing or stolen. For online banking, ensure that you can set up a double factor authentication to allow for secure online logins.
Customer service
A good customer service experience may not be such a big deal to some people, but if this is important to you, then doing a little research online can help you get information on the quality of service that a bank provides for its customers. Things you may want to look out for include, the support you get when you have banking issues, how much time you have to wait to speak to a banking representative or customer personnel when you need help etc.
Useful Banking Resources
Several banks have entered an agreement with the Canadian government to provide low to no cost banking solutions for youths, students, seniors, and registered disability savings plan beneficiaries.
The Canadian government provides a tool that compares different banks and their products. The comparison tool allows you to select what features you need in a bank such as the type of bank account, bank account currency, and the location of the bank.
Final Thoughts
Before you open a bank account in Canada, do your research and find a bank that offers favorable products and interest rates.
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