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Banking for Expats in Canada

Author: Gavin Adie
Submitted: October 2013

Banking services in Canada for expatriates are largely identical to those on offer in the United States, with similar fee levels and identification requirements. Most banks allow expats to set up a bank account before arriving in Canada, enabling you to hit the ground running.

Bank accounts established before relocating to Canada must be activated after arrival, a process that will also require that you provide details of the address that you intend to stay at while in Canada, as well as immigration status documentation. If copies of identification were used in the process of establishing an account, originals will be required.

The main domestic players in the Canadian banking market include Bank of Montreal; the Bank of Nova Scotia (commonly known as Scotiabank); Canadian Imperial Bank of Commerce (CIBC); National Bank of Canada; Royal Bank of Canada (RBC); and the Toronto-Dominion Bank (TD CanadaTrust). With international banks increasing their presence in Canada, a number of local banks offer expatriates fee-free banking for an initial term, generally twelve months, providing the account holder intends to stay for an extended period.

A number of international banks also have operations in Canada, including HSBC, ABN AMRO, Barclays, Capital One and Deutsche Bank. A comprehensive list of foreign bank subsidiaries can be found on the website of the Office of the Superintendent of Financial Institutions Canada, the national banking regulator, here: https://www.osfi-bsif.gc.ca/osfi/index_e.aspx?DetailID=568. A bank present in your home country may be able to establish an account in Canada on your behalf but a fee is generally charged for this service.

A number of other businesses offer banking services in Canada, including supermarket Loblaws, under a partnership with President's Choice Financial. Loblaws offers fee-free banking services exclusively online or via the telephone. Local credit unions also offer banking services, similar to building societies in the United Kingdom, and may offer a lower-fee solution to maintaining a Canadian account.

While increased competition in the Canadian banking sector is reportedly bringing down fees, the cost of banking in Canada is relatively high. Most basic banking accounts either carry monthly fees (generally between CAD2-10) or require a substantial maintained deposit coupled with low interest rates, below inflation. Uniquely known as Automatic Banking Machines (ABMs) in Canada, withdrawals from ATMs operated by banking institutions other than your own will face a fee, with higher charges often in place on credit card withdrawals. Fees may also apply to overdraft protection and faster check-clearing services.

Most bank accounts available to expatriates will face fees of one form or another. No- or low-fee accounts are generally only available to students or the elderly. Some accounts allow a certain number of transactions within a month with a fee for transactions above this limit, while others allow greater freedom but often carry a (higher) monthly fee.

The types of account on offer in Canada are largely equivalent to those in the United States, often with similar fee structures. An account comparison tool has been made available here by the state-run Financial Consumer Agency of Canada, here: https://www.fcac-acfc.gc.ca/Eng/resources/toolsCalculators/Pages/BankingT-OutilsIn.aspx

Checking accounts offer a wide range of banking services, such as writing checks, but often carry very low levels of interest. Checks are still in use in Canada and it is advisable to accept a check book if one is offered. Savings accounts carry higher rates of interest but may be require a minimum maintained balance and may restrict the number of fee-free withdrawals each month. Interest rates are generally lower in Canada than elsewhere, particularly compared to the rates on offer in the United Kingdom.

Other higher-interest accounts, such as "Guaranteed Investment Certificates," equivalent to a term-deposit account in the United States, are often offered. These accounts, while offering higher rates of interest, require that account holders make a minimum required deposit and retain funds in the account for a pre-defined period of time with penalties applicable to early withdrawals. Mutual funds, or tax-free savings accounts are often the preferred vehicle for locals however.

All bank accounts in Canada are protected by a guarantee of up to CAD100,000 (USD95,700) by the Canadian Deposit Insurance Corporation.

Credit cards are often offered to expatriates, and general-purpose bank accounts are generally not restricted to persons in employment.

The identification requirements in place when establishing an account are broadly similar to those in place in the United States. You will be required to provide:

  • Photo identification, such as your passport;
  • A social insurance number; and,
  • Either an IMM 1442 document (for temporary residents) or an IMM5292 (for permanent residents.)

You may also be asked to provide proof of your Canadian address.

Official documentation and banking documents are widely available in both French and English.

 

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