Banking for recently landed immigrants in Canada

What's the next thing you take care of after you apply for a Social Insurance Number (SIN) and a resident card?

A bank account to deposit your settlement funds and start building your credit history.

It looks like an easy task but when you actually go and try to open an account you will find that it is not as simple as it seems.

Not all banks want your money
I did not want to be carrying my settlement funds with me all the time so after a few days of my arrival in Vancouver, I looked around the neighbourhood for a bank. The first one I saw was CIBC so I went in and talked to a customer representative. When I told the bank rep that I wanted to deposit my settlement funds and that I am a landed immigrant, she asked for identification. Naturally, All I have are my landing document and my foreign passport. She wanted two pieces of ID so I gaver her the other ones I have, which is a driver's license, school ID and credit cards - all from the Philippines. The bank representative told me that none of the other IDs I have are not acceptable as they are not issued in Canada. I explained to her that the Canadian government thought my passport is sufficient to allow me to enter Canada and that I think it should also be adequate to open a bank account. The customer rep consulted with her supervisor and after a few minutes the supervisor told me that they require two valid pieces of ID, as stated in their policies, and that unfortunately my passport count only as one valid ID, so they turned me away. Disappointed, I looked for another bank and after walking a few blocks I saw the Royal Bank of Canada. I was greeted by a customer representative whose favorite expressions were awesome, excellent, great and terrific. Each time I answered his questions he responded by saying those verbal affirmations. Having been rejected by CIBC for trying to depost CAD$10,000, it sure feels good to be told those words although in a way I also feel stupid being treated that way. Anyway, RBC accepted my deposit with the condition that I would not be able to touch it for the next 10 business days. Encouraged by the account manager's helpfulness I deposited the other half of my funds, which are in US$, and put it in a GIC account (Guaranteed Investment).

Bank fees
From where I came from, banks pay you interest for the funds that you deposit. You receive high interest payments for money you put into savings account; higher if your put it into "time deposits". If you open a checking account, you get very little to no interest. These make sense, after all that is how banks make money - they pay interest for money they receive from depositors and then make the pooled funds available to borrowers at a higher interest. The difference in interest, otherwise known as the spread, is their income.

The first time I went into a bank in Vancouver I was surprised to know that you have to pay fees to the bank every time you withdraw or use the funds you deposit. There are no charges for deposits, but you get dinged each time you make a withdrawal or use your ATM/debit card to purchase something. The fees could be anywhere from 50 to 75 cents. If you know that you are going to make a lot of transactions per month, you can choose a package that will allow you to save on transaction fees.

I hate those fees and want to avoid them as much as possible, so I opted for the pay as you scheme where you get charged per transaction. I get one free debit transaction each month and pay 50 cents for additional withdrawals. This works for me as I didn't plan on and wasn't making more than one debit transactions each month.

Banks known for high fees are the Royal Bank of Canada (RBC) and ScotiaBank. I do not mean that you should avoid them. In fact RBC is my favorite bank in Canada and the accounts that I opened with them four years ago are still active to this day. The credit card I use for my everyday expenses is also an RBC visa card. In my opinion, RBC's customer service is one of the best there is. I guess that's the reason for the higher fees.

The cheapest checking account that you can get in Vancouver is the one offered by President's Choice Financial, because it's free. That's right, free. You get free checkbooks and when you use their debit and credit card for your everyday purchases, you may be able to get free groceries as well. You can apply for this checking account in a Superstore branch. The only downside to this account is they do not allow over the counter transactions. You do your banking online or over the telephone. Another bank that offers free checking account is Coast Capital Savings, but I don't have any experience with that bank so I can't say much.

Credit history
Since day one, I had planned to borrow money to buy a house and lease a car so getting a credit card was important to me. The very first one I got was a Mastercard from President's Choice and a few weeks later a Visa card from RBC. Having checking accounts with these two banks, no doubt, helped me get these credit cards. Today, I have about 10 credit cards but I only use 2 of them as my charge card - my RBC and PC credit cards.

Except for CapitalOne, which rejected me several times while at the same time offering me a card with annual fees, I have never had a credit card application denied.

USD credit or cards for Canadians landed immigrants
If you like crossing the border to shop, it may be worth owning a US$ debit or credit card. The exchange rate plus the 2.5% fees that your Canadian credit card company charges you can quickly add up.

The good news is that Bank of America and USBank in Blaine, Washington, which is about 45 minutes away from Vancouver, will allow you to open a checking account. If you maintain a specific balance each month, you may be able to keep the account free of charge. The debit card they will give you can also function as a credit card, in the sense that you don't have to enter you PIN every time you use it and that the charges are not deducted deducted from your account right away (I think it takes about 3 business days for the charges to affect your affect your account balance). I have tried to get a credit card from one of these banks but all I got are checking and savings account with a check/debit card. They told me that they don't have credit card options for people without a US address.

Recently, I learned that the Bank of Montreal offers USD Mastercard. I completed an application form in one their booths and three weeks later received my Mastercard (the one with the chip on it) with a $7,500.00 credit limit. The guy who helped me open the account cautioned me though that at the moment I can not use any of my Canadian bank accounts to pay my credit card balance online or over the phone. I would have to bring USD cash or check to their branch and make the payment over the counter. Still not complete hassle-free.

Then I found RBC Centura, which is an RBC bank operating in the US. My RBC account manager in Canada helped me open the Centura account. Two weeks later I was contacted by the Centura account manager in the US and was offered a USD VISA card. I was thinking this would be the perfect setup for Canadians wishing to have a US credit card that can be managed online with a linked Canadian bank account. The RBC Centura account can be linked to Canadian accounts allowing for a convenient way to tranfer funds.