How to open a bank account
By Delaney Rombough
Posted on October 11, 2021
Opening a bank account is one of the first things you want to do once you arrive in Canada. This is an important step for setting up your finances in order. Banking in Canada is reliable, secure, and easy. There are many options available including banking in person, online, or with mobile apps.
Opening an account
Opening a bank account is as easy as bringing two pieces of identification (ID) to your preferred branch in person—one piece of photo ID such as your passport or driver’s license and one piece of ID with your Canadian address, such as utilities bills, a lease, or housing documents.
You don’t need to deposit any money when you open the account, and you can open an account even if you don’t have a job yet. You should contact the financial institution to find out if there are other ways to open an account. Most bank accounts come with a debit card that can be used for daily transactions and withdrawing cash from ATMs.
The biggest banks in Canada are:
- Toronto-Dominion Canada Trust (TD)
- Bank of Montreal (BMO)
- Royal Bank of Canada (RBC)
- Canadian Imperial Bank of Commerce (CIBC)
There is no one “best bank”—this choice will depend on your needs and your financial situation. You can research the various banks to see the different products and services they offer.
Types of accounts
There are several different types of bank accounts that you can open. You should be aware of the fees that the bank charges for different accounts. However, most banks have special newcomer incentives and first-time customer promotions. You can visit the bank’s website to learn more about the fees and account types they offer. These are the most common types of bank accounts:
This is the account that will be used for most of your day-to-day banking such as making purchases, paying bills, writing cheques, using ATMs, transferring money between accounts, and payroll direct deposit from your workplace. There is typically a small monthly fee for a chequing account. For example, at RBC a standard chequing account for your daily banking with unlimited debit transactions and free Interac e-Transfers costs $11.95 per month.
This is the account where you can accumulate interest on your savings. Typically, a minimum deposit is required when opening a savings account. Each month, any interest you earn will go directly into your savings account. The higher the interest rate, the more money you’ll earn. Unlike a chequing account, you usually don’t have to pay a monthly fee, but you will pay taxes on any interest earned in your savings account. A savings account offers quick and easy access to your money for withdrawals and transfers.
A joint deposit account has the same features and benefits as an individual chequing or savings account, such as making deposits, payments, and withdrawals. However, you’re also responsible for any transactions made by the other owner of the account. Therefore, it’s important that both co-owners agree on how to use the account. To open a joint account, contact your financial institution to learn more about its policies and how it manages joint accounts.
Tax-Free Savings Account (TFSA)
A TFSA is a type of investment savings account. It’s a great way for individuals 18-years-old or older with a social insurance number (SIN) to set aside tax-free money throughout their life. You can also earn interest on any money in the account. Any contributed amount and any income earned in the account is generally tax-free. To open a TFSA, contact your financial institution and provide them with your SIN and date of birth.
Registered Retirement Savings Plan (RRSP)
An RRSP is similar to a TFSA in that it’s an investment savings account. You earn interest over time, and it’s tax-free. However, money in an RRSP will only remain tax-free as long as it’s in the account; you will be taxed on any money withdrawn from the account. To open an RRSP, contact your financial institution.
For an in-depth guide to TFSAs and RRSPs, check out The Newcomer’s article on investing for beginners.
Online and mobile banking
Online and mobile banking are becoming more popular options among Canadians. Most major banks and financial institutions allow you to do your banking either online or through their mobile app. This way, you can check your account balances, pay bills, transfer money to other accounts, check bank statements, and apply for loans and credit cards. You also may be able to deposit cheques through the mobile app.
There are also a number of banks and financial institutions that operate completely online. This means that you can open an account and do the majority of your daily banking from your phone or computer.
Some of Canada’s online banks include:
- EQ Bank
- Manulife Bank
Some of the benefits of online banks include 24/7 access, lower fees for accounts, and higher interest rates so you can earn more interest.
Because there are many options for bank accounts in Canada, it’s important to do your research and find out what type of account is best for you.