Opening a bank account in Canada[1] may be an important step for newcomers like you. A Canadian bank account provides you with a secure place to deposit your money. It allows you to deposit your income, pay bills, and manage your finances as you build your life here.
But which type of account should you choose? Do you need more than one?
Learn more about managing your finances by registering to our upcoming free and exclusive webinar: Investing in Canada – A Guide to Self-Directed Investing for Newcomers here. Plus, keep reading as this article may answer some of your questions and help you to understand your banking options.
Before opening a bank account, it is a good idea to do a little homework. Consider factors such as the types of accounts your bank has available, associated fees, and the specific services offered by different banks. Choosing the right bank with services and accounts designed for the needs of newcomers like you may be a good place to start.
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Types of Bank Accounts in Canada
In Canada, understanding the different types of bank accounts available may positively impact how you manage your banking needs. You may find you need more than one account to meet all your banking needs. Let’s review two primary categories: Personal Bank Accounts and Small Business Bank Accounts.
1. Personal Banking Accounts
Personal bank accounts are designed for you to manage your everyday transactions, savings, and investments, providing essential services like deposits, withdrawals, and bill payments. Here are the main types:
a. Chequing Accounts: Manage your daily expenses with ease.
A chequing account is a basic transactional account for everyday use, allowing deposits, withdrawals, purchases, payments, and transfers, with easy access via ATMs, online, in branches, and at point of sale. Banks like TD offers various types of chequing accounts:
- TD All-Inclusive Banking Plan: This account offers unlimited transactions and many additional perks like free cheques, fee rebate on select credit cards, and overdraft protection for a monthly fee. If you are someone who does a lot of banking, this account may be everything you need.
- TD Unlimited Chequing Account:You could choose this account if you would like to have the convenience of unlimited transactions for a fixed monthly fee (slightly lower than the Unlimited Account option). It comes with lots of benefits including free e-transfers, no ATM fees, and fee rebate on select credit cards.
- TD Everyday Chequing Account:A popular option, this account is suitable for regular use and comes with a limited number of free transactions per month. This account has a comparatively lower monthly fee.
- TD Minimum Chequing Account:This basic option may be a good choice if you maintain a set minimum balance to avoid fees. This option has the lowest monthly fee and limited free transactions included for those with minimal banking needs.
- TD Student Chequing Account:Tailored for students with no monthly fees and a set number of free transactions until 23 years old or with proof of enrollment. You must provide proof of enrollment in a full time Canadian secondary program.
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b. Savings Accounts: Set aside money for rainy days.
A savings account is a deposit account designed to help you save money while earning interest on your deposits. It may help you achieve financial goals such as vacations, education, or emergency funds. This account can help you set money aside for your short, medium, or long-term goals. Banks such as TD offers various types of savings accounts you may choose from:
- TD ePremium Savings Account: This type of account may help you save more with a high interest rate and enjoy unlimited free online transfers to your other TD deposit accounts, all with no monthly account fees.
- TD Everyday Savings Account:Ideal for those starting to save or needing frequent access to funds. This type of account generally has a $0 monthly fee. It earns daily interest on every dollar and usually allows you one free transaction per month.
- TD High Interest Savings Account (HISA):Designed for maximizing savings, this account offers you a high interest rate on balances of $5,000 or more, with no monthly fee and waived transaction fees if you maintain a minimum balance.
c. Tax-Advantaged Accounts: Maximize your savings for the future.
Tax-advantaged accounts are savings and investment accounts that provide tax benefits, helping individuals save for retirement or other financial goals more effectively. Banks such as TD offer the following types of tax advantage accounts (also known as registered accounts):
- Registered Retirement Savings Plan (RRSP): An RRSP is a retirement savings account that offers tax benefits. Contributions are tax-deductible, and the investment grows tax-free until withdrawal. In addition to tax deductions, its advantages include tax-deferred growth, income splitting, and access to funds for buying a first home or education. (Note: You cannot deduct contributions that you made to an RRSP in the first year that you will be filing a return in Canada)[2].
- Tax-Free Savings Account (TFSA): A TFSA is a registered savings account that allows you to invest your after-tax dollars up to your contribution room each year. Unlike an RRSP, your contributions are not tax-deductible, but any withdrawals you make are tax-free. It may hold various investments, providing flexibility for both short-term and long-term financial goals. With easy access to funds, it’s an excellent option for effective saving.
- First Home Savings Account (FHSA): The First Home Savings Account (FHSA) is a registered savings plan. FHSA is designed to help you save for your first home, tax-free, and help you reach your goal of owning a home faster! Contributions to a FHSA are similar to an RRSP in which they are tax deductible.
- Registered Education Savings Plan (RESP): An RESP is a long-term registered savings plan that allows you to set money aside to save for a child’s post-secondary education. Money invested in an RESP does grow tax-deferred, plus you could benefit from the Canada Education Savings Grant (CESG) of up to $7,200 and other available federal / provincial grants. CESG lifetime maximum is $7,200; however, CLB is $2,000; BCTESG (British Columbia Training & Education Savings Grant) is $1,200; and QESI (Quebec Education Savings Incentive) is $3,600.
Be sure to check your eligibility and your contribution limits when making any contributions to the above tax advantaged/registered accounts.
2. Small Business Accounts: Streamline your business finances.
Small business accounts are designed to help business owners manage their finances, including handling transactions, payroll, and business expenses. They offer features tailored to meet the needs of your small business.
Not all businesses are alike. That’s why TD Bank provides a variety of small business banking accounts to cater to different business needs. Here are three popular options:
- TD Unlimited Business Plan:Our most flexible banking plan for your business with additional features available. Click here to learn more.
- TD Everyday Business Plan A:A budget-friendly plan for everyday business banking. Click here to learn more.
- TD Basic Business Plan:Designed for businesses with just a few monthly transactions. Click here to learn more.
For a complete list of TD small business accounts, visit this link.
Understanding the different types of bank accounts available in Canada may help you manage your finances more effectively as you build your life in Canada. Whether you need a chequing account for daily transactions, a savings account to grow your money, or a specialized account for tax advantages or business needs, Canadian banks offer a range of options to suit your requirements. Happy banking!
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Why Choose TD?
150 years helping Canadians:
TD has a proud history of delivering financial solutions to Canadians for more than 150 years. TD also brings a century of experience helping newcomers navigate the unique challenges of the Canadian banking system.
With over a thousand branches, a reputation for excellence in financial services, and the ability to also serve you in more than 80 different languages, TD has become one of the largest and most trusted banks in Canada, now serving 16 million Canadians.
TD offers online support and resources of interest to newcomers on topics such as banking basics, moving to Canada, credit score essentials, and more. TD is open longer hours for your convenience. TD has thousands of ATMs across Canada to help you take care of your everyday banking quickly and easily.
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[1] https://www.canada.ca/en/financial-consumer-agency/services/banking/opening-bank-account.html
[2] https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4055/t4055-newcomers-canada.html