How to open a bank account in Canada

Canada is a beautiful place to live, work, or study. If you’re planning to move to the country, it’s wise to open a bank account beforehand. You should also take time to understand Canada’s banking and tax systems since you’ll be working and earning an income there. The good news is Canada has tax treaties with different countries, so you won’t pay taxes in both Canada and in your home country.

Canadian banks have a strong reputation globally for their safety and reliability because of their risk-averse approach and Canada's sound regulatory framework. Bank stocks can also be a source of regular income as they pay higher dividends than the market average.

In this post, we cover everything you need to know about opening a bank account in Canada, whether you’re a citizen or a recent expat.

What are the requirements for opening a bank account in Canada?

Each bank or credit union in Canada has its own requirements for opening an account. However, the documents required are usually similar:

You will need to offer 2 original pieces of ID from List A, which include: 

• A Canadian Social Insurance Number

• A Canadian passport

• A Canadian driving license

• A Permanent residence card

Alternatively, you can provide one original piece of ID from the above list and another one from a second set of documents (List B). These include:

• A foreign passport

• A signed debit or credit card in your name

• Employer photo ID (issued by an established company)

If both options don’t work for you, you can provide one ID from List A, and then someone can give you a reference confirming your identity.

How to open a Canadian bank account as a non-resident

If you’re planning to live and work in Canada for a long time, it’s good to open a Canadian bank account. While you’re not required by law to have a bank account in order to work in the country, most companies prefer that you have one because processing payments and paying taxes will be easier. A bank account can also help you to improve your credit score.

If you decide not to open a bank account, you can pay taxes directly to the CRA (Canada Revenue Agency) via wire transfer. You can also do it through a money transfer service like Xe or through an internationally-issued credit card.

If you’re a non-resident, you’ll need these documents to open a bank account:

• A valid passport

• A Social Insurance Number (SIN)

• Immigration papers

• Proof of address (like a letter from the government or a residential tenancy agreement)

Many Canadian banks usually consider one of these 4 immigration documents:

• A study permit

• A work permit

• Confirmation of Permanent Residence

• A Temporary Residence Permit

The demands may vary from bank to bank. Be sure to call the bank beforehand to ensure you have all the necessary documents.

These 5 Canadian banks may accept your application even if you don’t have a SIN:

• National Bank of Canada

• Scotiabank

• Royal Bank of Canada

• TD Canada Trust

• Canadian Imperial Bank of Commerce

This is because some non-interest-bearing accounts do not require a SIN. According to the Income Tax Act, banks should only get your SIN if you open an account that earns interest. This allows them to submit your interest earnings to the government.

How long does it take to open a bank account in Canada?

If you’re opening a bank account online, it may only take a couple of minutes. Some banks will even tell you how long it takes. For instance, TD Canada Trust states that its online applications only take 5 minutes to complete. 

However, if you lack the right paperwork, or if the bank wants to confirm something about your application, the process may take longer. You may be requested to visit the nearest bank branch in person to talk about the application.

Types of Canadian bank accounts

There are 2 popular types of bank accounts in Canada--savings and checking accounts--and they serve different purposes. A savings account, as the name implies, holds your savings for a period of time. A checking account is for everyday use. You can use it to pay for items and transfer funds. Here’s more detailed information on Canadian bank accounts. 

Checking account

This is the first account you should open and is designed for everyday use. It holds the money you use for daily transactions like making purchases and paying bills. You can also use the account to pay for recurring monthly expenses. Once you open a checking account, you may be granted check-writing privileges. However, it is worth mentioning that a checking account earns little or no yearly interest.

Features of a checking account:

• Pre-authorized payments: you can pay recurring bills automatically.

• Fees are charged for every transaction: this usually varies, depending on the transactions and the services.

• General account management and online services for transactions.

• Withdrawals, ATM and in-branch deposits, money transfers between accounts, and debit card transactions.

Savings account

If you don’t need some of your money immediately and would like to keep it somewhere safe for a long period of time, a savings account is ideal. It has one big advantage over a checking account: it earns higher interest. Some Canadian banks--like Accelerate Financial, Canadian Direct Financial, Peoples Trust, and Canadian Tire Bank--have savings accounts that earn a daily interest rate of at least 2%.

Canadian banks usually impose restrictions on the minimum available balance and the number of times you can access your money within a given period. If you fail to comply with these restrictions, you’ll be charged penalty fees on top of the regular transaction charges. Withdrawing money from a savings account is easy, you can visit your bank’s local branch or use your debit card at an ATM.

Features of a savings account:

• Money earns good interest based on the savings.

• Transaction fees are lower than for checking accounts.

• You can easily access your money when you need it.

• It allows you to save money for an emergency fund or special purchases.

• A service fee is charged if you don’t maintain a specific monthly balance.

Term deposit account

With a term deposit account, you let your money sit for a stipulated period of time without withdrawing it. And because of inconveniencing you, the bank gives you a much higher interest rate than for other accounts--including a savings account. However, the interest earned is lower than what you would get from riskier financial products like stocks and bonds.

When opening a term deposit account, you sign an agreement which states that the funds will be held for a specified period of time. You may also be required to notify the bank in advance before withdrawing the money.

If you withdraw money from a term deposit account before its maturity, you may pay a hefty penalty. But the good news is some Canadian banks let you withdraw the accrued interest so long as you don’t touch the principal.

What are the best Canadian banks?

There are 6 major banks in Canada:

1. Canadian Imperial Bank of Commerce (CIBC)

2. TD Canada Trust

3. Royal Bank of Canada (RBC)

4. The National Bank of Canada

5. The Bank of Nova Scotia (Scotiabank)

6. The Bank of Montreal

For many years, the Royal Bank of Canada has ranked very highly in terms of overall customer satisfaction. It is closely followed by TD Canada Trust and Bank of Montreal.

If you don’t like visiting a brick-and-mortar bank branch, open an account with Tangerine Bank, EQ bank, or Simplii Financial. These are the best banks for online banking. They offer free online checking accounts, savings accounts, or a combination.

Our research has shown that these are the best banks for different needs:

• Best banks for students: CIBC (Smart for Students Chequing Account) and Scotiabank (Student Banking Advantage Plan).

• Best banks for small business: RBC (Digital Choice Business Account) and Toronto-Dominion Bank (TD Basic Business Plan).

• Best banks for immigrants: HSBC (HSBC Canada Newcomers Program) and

  Scotiabank (Scotiabank StartRight Program).

• Best banks for mortgage: Bank of Montreal and TD Canada Trust.

• Best banks for investing: Bank of Nova Scotia and Bank of Montreal.

Use Xe and save every time you send money abroad

Every time you send money abroad, you encounter 2 costs: the foreign exchange margin and the upfront fee. Most banks give you a higher rate than what they get on the market in order to make a lot of profit—this is on top of the upfront fees that they will charge you to make a transfer. And those aren’t the only fees either: banks typically send money transfers through the SWIFT system, which means you’ll be charged SWIFT fees.

To find the best deal, you have to compare the fees charged by different Canadian banks, which can be a painstaking process. If you’ll be transferring large sums of money between banks or sending money back home regularly, you’ll pay hefty fees every time.

You can avoid this.

Use Xe to transfer money internationally or to send money abroad. We offer competitive exchange rates, so you’ll be able to send more money back home.

We make transferring money from Canada quick, easy, and affordable. Open an account today and start transacting!