Finance: The Basics on Banking in Canada

By the FCAC

As you start your new life in Canada, you will need to find out how to manage your money in this country. One of the first things you should do is to open a bank account. Canadian bank accounts are a safe and convenient place to keep your money.

If you do not have a job yet or you do not have much money, you may wonder if a bank will accept you as a customer. You do not need to worry. If you have the right kind of identification, you should be able to open a bank account in Canada.

Your right to a bank account

  • Under Canadian law, you have the right to open a personal bank account, even if:
  • you do not have a job;
  • you do not have money to put in the account right away; or
  • you have been bankrupt.

However, some types of financial institutions — such as credit unions and caisses populaires — come under provincial law and may have different rules to open an account.

How to open a bank account

When you go to the bank to open an account, you must show the bank two pieces of acceptable identification (I.D.). These must be original copies, since banks will not accept photocopies. Many types of I.D. are acceptable, including a Social Insurance Number (SIN), a permanent resident card or a valid passport from another country.

If you have only one piece of acceptable identification, you can have someone confirm your identity to the bank. This person must be a client in good standing with the bank or an individual in good standing in the community where the bank is located.

To get a complete list of acceptable types of I.D., you can call the Financial Consumer Agency of Canada (FCAC), at no cost, at: 1-866-461-3222 or visit FCAC’s website at: www.fcac.gc.ca. FCAC is a federal government agency that provides free information about financial products and services in Canada. FCAC also protects your rights as a financial consumer, and makes sure that banks obey the law.

When you open a bank account, the bank cannot force you to buy one financial product from them before you can buy another product. This is called “coercive tied selling”. It is illegal.

Types of bank accounts

There are different types of bank accounts you can get. These include savings accounts and chequing accounts. Most accounts come with a bank card, which is also called a debit card. You can use a debit card to take money out of your account at an automated banking machine (ABM). You can also use a debit card, instead of cash, to buy things at stores using a Point of Sale terminal where you slide your card and enter a Personal Identification Number (PIN) on the PIN pad.

Most of the big banks in Canada also offer deposit accounts that have low monthly service charges. These low-cost accounts cost a maximum of $4 every month and include:

  • a debit card;
  • the ability to write cheques;
  • no charge to deposit your money;
  • a free statement, every month, that shows all of the money that came in and out of your account;
  • a certain number of free transactions every month — including some transactions at your bank branch.

FCAC has a tool called The Cost of Banking Guide, available on line and in print, which you can use to compare different banking packages to find the best product for your needs.

Information the bank must give you

When you open a bank account, the bank must give you the following information:

  • a copy of your account agreement;
  • rate of interest, and how the bank determines the amount of interest it will pay you, if your account earns interest;
  • all of the charges or “fees” that you will have to pay on your account;
  • how the bank will tell you if it increases the fees or adds new fees to your account;
  • how you can make a complaint;
  • how long the bank can put a “hold” on cheques you deposit into your account.

If the bank does not give you this information before or at the time you open your account, it is possible that the bank broke the law. If you think that this is the case, you can complain to the Financial Consumer Agency of Canada.

Reasons why a bank can refuse to open an account

Even if you have a right to open a bank account, banks can refuse to open an account for many reasons. These include:

  • if the bank has a good reason to believe that you might use the account in a dishonest way;
  • if you have committed a crime against a financial institution in the past seven years;
  • if the bank thinks that you gave it false information when you opened your account;
  • if the bank thinks that you might abuse, harass or harm its customers or staff.

If a bank refuses to open an account for you, the bank must tell you in writing that it refused. However, the bank does not have to tell you why it refused. The bank must also tell you in writing how to contact the Financial Consumer Agency of Canada.

Your right to complain

If you do not agree with the bank’s decision to refuse to open an account, you can make a complaint. By law, every bank in Canada must have a process for handling complaints. First, tell the bank you want to make a complaint. Then follow the steps that are listed in the bank’s complaint policy. If you believe that the bank did not obey the law, you can contact FCAC. The Agency also has an on-line tool that lets you search for the complaint-handling process at your bank. FCAC’s Web site shows you what to do and who to contact at each step during a dispute with a bank.

Cashing your government cheque for free

Even if you do not have a bank account, you can still cash a Government of Canada cheque in your name that is under $1,500, free of charge, at any bank branch that has tellers. Some examples of government cheques are cheques for goods and services tax (GST) credits; for an income tax refund; for old age security benefits; for employment insurance; and for child tax credit benefits.

To cash a government cheque, you must show a piece of identification that has your photograph and signature on it, such as a permanent resident card. A bank can refuse to cash your cheque if you cannot show proper identification, or if the bank believes the cheque you want to cash is false, or has been changed in some way, or is connected with a crime or fraud. If the bank refuses to cash the cheque, it must also tell you in writing that it refused, and also tell you in writing how to contact FCAC.

Find out more

To find out more about your rights and responsibilities when you open a bank account or cash a government cheque, see the Financial Consumer Agency of Canada’s publications Opening a Personal Bank Account and Cashing Your Government of Canada Cheque for Free. You can find these publications on FCAC’s Web site at: www.fcac.gc.ca.

You can also order a print copy by calling FCAC, at no cost, at: 1-866-461-3222. FCAC can help you find out more about financial products and services as you get settled in Canada.

CNM