Money and banking

Paying by cash, debit card, credit card, or cheque

The money used in Canada is the Canadian dollar (money is also called "cash"). Cash is coins and bills.

Canada uses 5 kinds of coins: nickel, dime, quarter, loonie, and toonie.

Bills (paper money) are $5, $10, $20, $50, and $100.

Many prices include cents in the price, but Canada doesn’t make 1¢ coins anymore. So stores will “round up” or “round down” to the nearest 5 cents. For example:

• if the cost is $1.01 or $1.02, you will pay $1.00
• if the cost is between $1.03 and $1.07, you will pay $1.05
• if the cost is $1.08 or $1.09, you will pay $1.10

If you pay with a credit card or a debit card, you will pay the exact cost.

In B.C., you must pay tax on most products and services you buy. There are 2 kinds of tax. Provincial Sales Tax (PST) is 7% added to the cost of things you buy. Goods and Services Tax (GST) is 5% added to the cost of things and services you buy. Most products and services show the price before tax. Taxes are added to your bill when you pay.

For example, if you buy something that costs $10, the person at the payment counter will ask you to pay $11.20. The extra $1.20 is the tax: 50¢ for PST, and 70¢ for GST.

The price in stores is fixed. People do not ask for (bargain) a lower price in stores. Some special items have more taxes added. There are extra taxes for alcohol, tobacco, e-cigarettes, e-juice (vaping juice), vaping products, some cannabis products, gasoline, and vehicles.

Most stores open around 9 or 10 am (in the morning) and close at 5:30 or 6 pm (in the evening). Some stores are open in the evenings. Many stores are closed on Sundays. Most grocery stores and large department stores are open in the evenings and 7 days a week.

Using a bank machine

Banks, credit unions, and some trust companies have bank machines. You use them to take cash out of your bank account. They are called automated teller machines (ATMs).

To use bank machines, you need a debit card from your bank or credit union. You can also borrow cash using your credit card, but you will pay a high interest rate.

ATMs are open 24 hours a day. You can find ATMs in banks, convenience stores, and other public places. You can withdraw money or check your bank account at any ATM. Most banks and credit unions charge fees when you use other companies’ ATMs to do a transaction. Ask your bank about transaction rules and fees. To pay bills and deposit or transfer money, you may need to use an ATM that belongs to your bank.

Returning a purchase for a refund or exchange

Sometimes, you may buy something and find out that it doesn’t fit, or it doesn’t work. You may decide not to keep it.

• If you have not used the item, you may be able to return it to the store. Ask about the return policy before you buy an item. Not all stores have the same rules.
• Some stores will not take things back.
• Some stores will give you a refund (give your money back).
• Others will not give you your money back, but they will let you do an exchange (take a new item to replace the item you returned). Some stores will give you store credit (saved money you can use for your next purchase at that store).
• Always keep your receipt. It proves when and where you bought the item. Most stores will not allow you to return or exchange your item without the receipt.

Opening a bank account

You can open an account at a bank, credit union, or trust company. Many financial institutions offer accounts designed for newcomers to Canada. Get information about different banks and accounts before you choose. Find out about the kinds of accounts and what the fees are. Sometimes, you can be charged when you deposit (put in), transfer (move), or withdraw (take out) your money. Some accounts pay interest on the money in your accounts. Ask questions about banking fees and interest rates.

You may be able to open a bank account in Canada even if you live in another country or are not a Canadian citizen. You may need to go to the bank in person to open a bank account. Contact the bank for more information and to find out what identification you need.

Types of accounts

Chequing account

A chequing account lets you use a special piece of paper (cheque) to pay someone. Most Canadians do not write cheques anymore, but some landlords will ask for the rent to be paid by cheque. Canadians use debit cards, credit cards, or bank transfers to pay people and buy things. Some chequing accounts charge monthly service fees. Some charge a fee for each transaction. Most chequing accounts do not pay interest.

Savings account

All savings accounts pay interest on the money you leave in your account. Banks give different interest rates. Most savings accounts do not allow you to write cheques.

Chequing-savings account

Chequing-savings accounts pay interest, and they also allow you to write cheques. Different banks have different fees and interest rates for chequing-savings accounts.

Banking by telephone or online

Many Canadians use their computer or smartphone to do online banking. You can check your account balance, send or receive money, transfer money between accounts, and pay your bills. Some banks may have services in different languages.

You can also do your banking by telephone. Call your bank to set up telephone banking. Some banks have mobile phone apps for online banking. Some apps let you take a photo of a cheque and deposit it into your account using a smartphone app. Ask your bank or credit union about their online and mobile banking services.

Security is important if you are banking online. Criminals can steal your information and money online. Choose a password that is difficult to guess. Don’t tell anyone your password. When you log into your bank account, you should only use a private computer. Do not log onto your bank from a public computer (for example, at a library), or while you are using public WiFi. 

Use a secure private internet connection. Put an antivirus program (security software) on your own computer. Do not reply to any emails asking for your account information. Do not click on any links inside of emails or text messages from people you don’t know. They may be scam emails or messages. Scammers send you viruses that let them steal your information. To learn more, visit the Safety and security page.

For information about internet safety, visit the Canadian Bankers Association website. 

For information about passwords, visit the Government of Canada website.  

Sending money to other countries

You can send money to people in other countries through a bank or a foreign exchange company. You can also mail a money order (also called a draft). Money orders can be sent from a bank, foreign exchange company, or post office. Before you send money, make sure the payment can be accepted in the country you are sending it to. Some institutions cannot accept certain kinds of payment.

You may have to pay an extra fee to send money to another country. Different companies charge different fees. Check the fees with different companies. The Canadian Bankers Association website can answer many questions about banking in Canada. 

The CBA website also has information about bank accounts, credit cards, mobile payments, cheques, mortgages, online security, and many other banking topics.

Borrowing money

A loan is money you borrow from a bank, credit union, or another financial institution. Canadians borrow money to buy things now and pay back the money later. This is usually for large items, like a car (car loan), a house (mortgage), or education costs (student loan). Before you get a loan from a financial institution, you will have to prove that you can repay the money.

The money you borrow is called the “principal”. The fee you pay for borrowing the money is called “interest”. The amount of time you have to repay the loan is called the “term”. For example, you might borrow $10,000 (principal) at an interest rate of 7%, over a term of 1 year. By the end of 1 year, you will have paid back $10,700. Each month, you must pay back part of the principal (the money you borrowed) and the interest. 

The lender will decide the interest rate. Check with several lenders to compare their interest rates. Find out more about borrowing money and kinds of loans. 

Most Canadians also use credit cards to borrow money for day-to-day items like groceries, gas, and clothes. The cards are offered by banks and financial institutions. You can use a plastic card or a smartphone app to buy things in person or online.

There are many credit cards to choose from. Some have an annual fee. Some are free. Some offer you cash back, giving you points or credit whenever you spend money with your credit card. Some include benefits, such as travel health insurance or protection for items you buy on the credit card. There are websites that can help you compare credit cards and choose the card that is best for you. Find out more about credit cards. 

Every month, you will get a statement (a list of all your purchases and payments). If you owe money to the credit card company, you must pay the minimum payment (part of the bill) every month. If you do not pay the full amount, you will be charged interest on the amount you owe.

Credit card interest is much higher than interest on a loan. Many Canadians get into financial trouble because it is easy to lose track of how much they are spending on their credit card. High interest rates also mean the debt (amount you owe) can increase very quickly. As the debt gets bigger, it becomes harder to make payments.

The Credit Counselling Society helps people deal with debt and credit problems. They also offer free financial counselling and education. 

Many Canadians save money to buy a home, pay for their children’s college or university education, or use when they retire (stop working). There are many ways to save and grow your money. Getting good financial advice is important.

Finding a financial advisor

Most Canadians try to save and invest their money. Some people manage their savings and investments by themselves. Some hire a financial planner or advisor to help them. You can also get financial advice from your bank, credit union, or trust company.

Banks and other financial companies sell investment products. These include term deposits, mutual funds, Guaranteed Investment Certificates (GICs), and treasury bills. You can also invest in the stock market.

It is a good idea to have a financial advisor or planner, even if you don’t earn, save, or invest a lot of money. They can help you understand what you will need to prepare for your future. Learn more about finding and working with a financial advisor or planner. 

Planning for retirement

Retirement is when you stop working and use the money you’ve saved as income for the rest of your life. Most Canadians retire between the ages of 60 and 65. Many people find a part-time job after retiring to bring in extra money.

Most Canadians save for their retirement in three ways:

• You work and save money yourself . You invest and manage the money, so you have enough to live on when you retire. Most Canadians have a Registered Retirement Savings Plan (RRSP). Learn more about Registered Retirement Savings Plans.
• You and your employer contribute to an RRSP . You invest and manage the money. When you retire, you spend the interest and some of the savings each year.
• Employer pension plans: You and your employer both pay into a defined benefits pension. A pension manager handles the investments—you do not have to make any decisions about what to do with the money. After you retire, you will get monthly payments from the pension plan. Sometimes, you will also get benefits (extra money for special situations). For example, your pension may give some extra money to cover your dental costs or eyeglasses. If you change jobs, your new job may not have a pension plan. Many Canadians who have a pension also have an RRSP.

Many immigrants moved to Canada as adults and will not work here long enough to save enough money for retirement. It is important to begin planning now. If you start saving early, you will earn more interest on your money over time. A financial advisor can help you understand how much you need to save for retirement.

Home Buyers’ Plan

The federal government’s Home Buyers’ Plan lets Canadians withdraw money from their registered retirement savings plan, tax-free, and use it to buy a first home. There are strict rules about taking the money out of a registered savings account. Be sure you understand the rules for each account. 

Registered Education Savings Plan

A Registered Education Savings Plan allows you to save money, tax-free, for your child’s education. There are strict rules about taking the money out of a registered savings account. Be sure you understand the rules for each account.

Registered Retirement Savings Plan

The Canadian government has a plan to help people save money for their retirement. If you register your savings account with the government (Registered Retirement Savings Plan, or RRSP), you may be able to deduct money the money you deposit from your taxable income that year. This means you will pay less income tax. Learn more about the Registered Retirement Savings Plan. 

There are strict rules about taking the money out of a registered savings account. Be sure you understand the rules for each account.