Learning how to manage your money can be challenging when moving to Canada. When you immigrate, you need to open a bank account, learn how to make bill payments, and build your credit from scratch. Since many new Canadians start out in low-paying jobs or send much of what they earn back home, saving money can be difficult. That’s why it’s important to have the right savings account to keep your money in.
In Canada, a savings account is a type of bank account used for saving money. Unlike chequing accounts, which are used for day-to-day banking, savings accounts are for deposits and withdrawals only. Savings accounts usually pay interest and don’t have a monthly fee.
To open a savings account, start by choosing a financial institution. In Canada, you can open an account with any bank or credit union that does business in your province. You also don’t have to use the same bank you use for your chequing account.
When comparing savings accounts, the first thing to look for is the interest rate. The higher the rate, the more money your savings will earn. Some Canadian banks offer teaser rates (the interest rate starts out very high, but drops after an introductory period). We recommend choosing a savings account with an everyday high interest rate instead because you’ll earn more interest on your savings in the long run. You can use a savings account calculator to find out how much more money you’ll earn with an everyday high interest rate over a teaser rate.
You’ll also want to look at the other features of the account. Important features to look at include transaction fees (the cost to withdraw money), transfer fees (the cost to move money in and out of your savings account), e-Transfer fees (the cost to send an email money transfer), and external ATM fees (the cost to take money out from a different bank’s machine).
One savings account that pays a high rate of interest with low fees is the EQ Bank Savings Plus Account. It includes unlimited free transactions and five free Interac e-Transfers a month.
Most Canadian banks also offer a type of savings account called a tax-free savings account (TFSA). This type of account helps you save taxes on the interest or investment income you earn. You’re allowed to have various kinds of investments in TFSAs and you can put cash in a high-interest TFSA. There are special TFSA rules that limit the amount of money you can deposit in this type of account (our TFSA contribution room calculator makes it easy to determine your personal deposit limit, with custom options for newly-arrived immigrants to Canada). If you’re just planning to save a little bit of money every month, you probably won’t benefit much from a TFSA. Save your contribution room for investments with a bigger return.
To open a regular savings account, you need to be a Canadian resident. This includes international students, foreign workers, permanent residents (formerly referred to as landed immigrants), and Canadian citizens. If you live and work in Canada, you’ll probably qualify.
While you can open a chequing account before you arrive in Canada, you’ll need to wait until you arrive to open a savings account. Fortunately, the application process will be very easy compared to opening your first bank account (you can apply for most savings accounts online). But before the account can be opened, you may need to provide identification, such as your passport, immigration documents, or proof of enrolment for students. You might also be asked to provide your social insurance number (SIN) and provide a void cheque to link your new savings account to your existing chequing account.
If you need help, you can also apply for a savings account over the phone or in person. Some banks even offer services in languages other than English and French if that’s easier for you. For example, Scotiabank offers services in more than 50 languages and even offers a tool on its website to help you find a location with employees who speak your language.
Once your savings account is open, you can transfer money from your regular bank account or from international accounts using wire transfers. When you need to take money out, you can transfer your money back the same way.
If you’re moving money from another country, your bank will convert it to Canadian currency before depositing it in your account. Some banks charge a fee for the exchange as a percentage of the deposit amount while others mark up their conversion rate. If you’re worried about the cost of converting your money to Canadian dollars, you can call your bank to ask about its exchange rate and fees.
Once your Canadian savings account is open, all that’s left to do is watch your money grow. As you spend more time in Canada, your banking needs may change. So it’s a good idea to compare savings accounts once in a while to make sure you still have the best account for you.
The bottom line
A savings account is a great way to save your money and it’s easy for new Canadians to get started. Compare savings accounts online, find the one that’s best for you, and start saving your money.