Banking Tips for Newcomers in Canada

Every year thousands of new immigrants find Canada as their new home. There are many different things they face here, the way things works here may not be same as their home country, one of these is Banking.

There are primarily two kinds of financial institutions: 1) Banks 2) Credit unions. Let’s see major differences:

Banks:
1) Higher monthly account fees, e.g. $5-$35 per month for a basic chequing account. Bank also charges fees for issuing cheques, transfer money to other institutions, drafts etc.

2) Banks do not typically give interests on deposits, if they do then it pretty low, e.g. .01% to .05% which is almost nill. On high interest savings account interest rate is typically in range of .50% which is also not very much.

3) Bank credit cards have high interest rates, e.g. 19-20%. Be Careful with credit cards! Choose credit card with lower interest, credit card is a much to build credit history in Canada which later on helps to get mortgage etc.

4) Bank’s motive is to generate profit for shareholders, and not for consumers. Bank can never be friends to consumers!

5) Bank deposits are typically insured upto ~$100K in Canada.

Credit Unions:
1) Credit unions offer very low or almost zero accountant maintenance fees. All transactions are free including cheques.

2) Consumer is a member of credit union. Credit unions typically give better interest rates on deposits than bank, e.g. 1.5%.

3) Credit cards VISA/MASTERDARD offered by credit unions have similar interest rates as banks, e.g. 19-21%. Although some credit unions offer lower interest rate to their member to help them improve their credit ratings if they have debt.

4) Credit unions are friends to consumer! Every customer is a member, they offer better customer service. For example whenever I call to my credit union within 5 minutes I get response then to bank where person keep on waiting for hours. Credit unions are simply better for people.

5) All deposits are insured up to $250K in Ontario. In British Columbia deposits are insured in full!! which means in case of bankruptcy customers will get they full deposit in credit union in BC (e.g. vancity) than bank. Credit unions clearly better than any bank.

These are a few key differences listed above. Something to think about that people deposit money to Bank and Bank charges monthly fees, do not give interests to customers yet they make money on customer’s money, bad customer service, and many more things associated with banks which are not in favour of customers.

Many people believe that if they have relationship with big banks they will help them when they need bank, e.g. get small loan, mortgage, credit line etc, which in my experience it is not true. I have it experienced myself with one of the largest bank, when I needed them they did not help me, not even realizing that I had been loyal customer since over a decade with them, they never helped me. I have later switched to one of very good credit union – PARAMA.

We definitely advocate Credit unions. Banks will never help you, Credit unions may help you!

Be wise and choose credit unions for your daily day-to-day banking needs. There may be many credit unions in your neighbourhood, typically older is better, also look for which give better interest on deposits, e.g. savings, GIC, lower mortgage rates, and also no monthly account maintenance fees. Some of the good credit unions we came across in Canada are: PARAMA, DUCA, MERIDIAN, and VANCITY (BC).

Please leave your comments and share your experience that may be very helpful to other people.