Managing finance and building Credit in Canada

As you immigrate to Canada, you need to open a banking account. On the face of it, it appears too simple issue to discuss about opening of bank account, then why a blog about it? Banking in Canada is much different from banking in India or Pakistan.

Especially in India, you see bankers wooing you to open a zero balance account, free cheque book, DD facility or free pick up and delivery of your instruments. When you immigrate to Canada, you could be in for a surprise as there would be limit on free cheques and host of facilities that you get in home country, would be coming at cost. Of course, overall, banking is much more pleasant experience in Canada.

You need to select the right banker that suits your requirements at the time in cost effective manner. Different accounts options with different banks come at different costs.

It is a good idea to learn the banking options as soon as you can. Decide what your banking needs are and compare services at several banks before you open an account.

A bank account also helps to give you a credit history, which will be helpful if you need to borrow money or get a credit card. There are many types of financial institutions where you can open savings and/or chequing accounts. Banks, trust companies and credit unions provide free information about their services, including debit and credit cards. You can walk into any bank and ask about their services.

You will need two pieces of identification to open an account at a bank, trust company or credit union. Usually, one piece must have your picture on it. You do not need to deposit a certain amount of money to open an account. You do not have to be employed to open an account.

USING A BANK MACHINE
When you open a bank account, you will receive a card called a bank card, also known as a debit card. This card lets you do your banking at a bank machine instead of using the bank. You can use the bank machines to deposit money, withdraw money and pay bills. These machines are called Automated Banking Machines (ABMs) or Automated Teller Machines (ATMs).

The bank will make you choose a Personal Identification Number (PIN) with the card. This is a security number that prevents others from using your card. Learn the number. Do not tell others your PIN. You must enter the PIN every time you use your bank card.
If you use the ABM of another bank, it will charge you a fee. The fee is even larger when you use a private ABM. These machines are found in corner stores, restaurants and other places. They often charge you a lot of money just to take out money. It is cheaper to use only the machines owned by one of the banks or credit unions.

Credit cards and building credit
Even if you had many years of credit history, with worldwide credit card companies such as VISA and MasterCard, you may not be able to get such a credit card in Canada. This is a surprise to many people.

If possible, do not cancel your credit cards before you come to Canada. You may not be able to get a credit card right away here. If that happens, you will want to have access to the credit cards you have now.

To build your credit history in Canada, apply for a credit card. Talk to the staff at your local bank. Your bank may be willing to give you a credit card with a smaller spending limit or a Secured Credit Card.

To obtain a secured card, you will need to deposit a sum of money with the credit card issuer. The security deposit for a secured card will depend on the credit limit you request. If you pay back your monthly credit fees and build up a good credit history, you will get the deposit back with interest. You can then get a regular credit card.

Many stores offer credit cards to use in their stores. These cards often have very high interest rates so be sure to pay the entire balance each month.

Remember, living with Bad Credit in Canada, can be a worst nightmare. Don’t let your credit history go bad.