Personal bank account in Canada: chequing, credit and first steps

The right to basic banking services

A personal bank account in Canada, known as a chequing account, receives salary or funding, pays rent and bills through Interac and serves as the base for building a credit history. Federal rules allow anyone to open one, even without a job or initial deposit, provided they show acceptable identification, and a bank that refuses must explain the refusal in writing.

Federal rules allow anyone to open a Canadian personal account at a bank, even without a job or initial deposit, provided they show acceptable identification. A bank may refuse for fraud or false statements but must explain the refusal in writing.

Newcomer packages: lower fees and a credit card

Large banks offer recently arrived permanent residents a period without monthly fees, a safety deposit box or a credit card with no Canadian history. The length and terms of the offer vary by bank and immigration status.

International students: study permit and GIC

An international student shows the study permit and the letter of admission. Many students also open a guaranteed investment certificate (GIC) to prove living funds to Immigration Canada; the money is then released in instalments during the first year of study.

Building a credit score from scratch

A foreign credit history is not carried over by Equifax or TransUnion in Canada. A secured card or a small credit limit repaid every month builds a score that helps when renting a home or financing a car.

TFSA and RRSP: accounts reserved for residents

The Tax-Free Savings Account (TFSA) and the Registered Retirement Savings Plan (RRSP) require a SIN and, in practice, Canadian tax residence. A non-resident who contributes can face penalties, so status should be checked first.

Snowbirds and US dollar accounts

European and Canadian retirees spend winter in Florida or Arizona and keep a US dollar account in Canada for their expenses. US dollar credit cards help them avoid paying conversion fees on every purchase made south of the border.

Foreign pension paid into a Canadian account

A French or Belgian pension paid in euros is converted on arrival; some retirees keep a European account and transfer in tranches. The pension remains taxable under the treaty between Canada and the paying country.

At a major bank: monthly fees and plans

At Royal Bank of Canada (RBC), as at its competitors, chequing accounts come in monthly plans, from limited transactions to unlimited packages. Fees on a chequing account are often waived if a minimum balance is kept in the account throughout the whole month.

Providing a SIN for interest and tax

Interest on a savings account is reported on a T5 slip in the name of a resident holder, hence the SIN request. A non-resident instead provides form NR301 to declare tax residence and claim the treaty rate.

Leaving Canada and reporting accounts

When leaving, notify the bank of the change of residence to stop TFSA contributions and adjust withholding. Back in France, the holder declares every Canadian account still open on form 3916 each year.

How to open a personal bank account in Canada: the steps

Before going to a branch, decide the main use of the account: receiving salary or a grant, paying rent, settling bills through Interac or starting a credit history. That purpose guides your choice of plan. Also look at the offers for newcomers or students, because their length and terms vary by bank and immigration status.

Then book an appointment, by phone or online, with two or three banks to compare their plans. Ask which identity documents are accepted, whether proof of address is needed on day one and whether you must already hold a social insurance number. Practices differ between branches; a written reply avoids unpleasant surprises at the counter.

During the visit, the adviser checks your identity, records your address and explains how the chequing account, the debit card and online banking work. Take the time to read the conditions, especially the monthly fees, the included transactions and the minimum balance that waives the fees. Keep a copy of the signed agreement.

Documents to prepare for a personal account in Canada

The first set of documents establishes your identity: a valid passport and, depending on your situation, an immigration document such as a study permit, work permit or confirmation of permanent residence. Federal rules allow access to basic services if the documents are acceptable. So bring originals in good condition, not simple copies.

The second set proves your address and situation: a lease or landlord’s letter, an admission letter for a student, an employment contract or proof of a grant. If you do not yet have a permanent address, ask the bank which solutions it accepts. The social insurance number, when you have one, is requested so that interest can be reported on a tax slip in the name of the resident holder.

The third set concerns the link with your home country: if you come from France or another country, keep your original tax number and the date of arrival at hand. The bank must know your tax residence to apply its information-exchange rules. A non-resident may have to complete a specific form declaring their situation and claim the rate provided by a treaty.

Common mistakes with a Canadian personal account

The first mistake is to believe that your credit history transfers from abroad. A French or Belgian record is not carried over by Canadian credit bureaus, and a newcomer starts with no score. From the first months, use a secured card or a small limit, repaid in full each month, to build a history that helps with renting or financing a vehicle.

The second mistake is to contribute to a TFSA or an RRSP without checking tax residence. These accounts are reserved for Canadian residents, and a non-resident who pays money in can face penalties. Before any contribution, check your status with the bank or a tax adviser, especially if your stay is short or your situation is changing.

The third mistake occurs at departure. Many leave without telling the bank about the change of residence, although that information is used to adjust withholding and stop contributions. Back in France, you must also declare the Canadian accounts you keep every year. Inform the bank in advance and keep statements for the last few years.

Questions to ask the bank before choosing a chequing account

First ask how much each monthly plan costs, which transactions it includes and under what conditions fees are waived, for example by keeping a minimum balance throughout the month. Compare the limited-transaction account with the unlimited plan based on your real usage. An overly rich plan costs needlessly, while a too-limited one generates fees on every extra transaction.

Then ask the adviser about cards and payments: Interac debit card, newcomer credit card, transfers between individuals and mobile cheque deposit. If you spend winters in the United States or receive a foreign pension, ask how to hold a US dollar account and which solutions reduce conversion costs on transfers.

Finally, check the security and monitoring rules: withdrawal limits, the procedure if a card is lost, the time before an inactive account is closed and deposit protection. Ask about possible refusal, which the bank must explain in writing. Keep all confirmations and written terms as a reference in case of disagreement.