Moving to a new nation, whether it be Canada, the United States, or somewhere else, is not as simple as it sounds. However, there is no necessity for that to put a strain on your financial situation in any way. No matter what occurs, the most important thing you can do to ensure a seamless transition in your foreign transfer is to keep your financial affairs in order. But how exactly can you accomplish that? You may do this by being well-prepared and learning everything you need to know about banking in Canada, even though you are an expat there. If you are already aware of what to anticipate after moving to Canada, you will have already won the first half of the battle of being an expat.
The process of adjusting to life in Canada begins with opening a bank account in Canada, which is one of the initial steps. As a means of assisting you, we have compiled a handbook that details everything you must information on regarding banking in Canada as an OFW, as well as how you may get started.
- What You Need to Know about Banking in Canada as an OFW
- Getting a bank account
- Daily banking services
- Money transfers
- Paying bills
- Borrowing options
- Reducing your banking costs
- Choosing the right bank services for you
- OFW banking is designed to meet the needs of temporary workers in Canada.
- Newcomers to Canada can get loans for purchasing new or used vehicles.
- If a person has a permanent job, getting an interest-free loan from the bank is possible without providing collateral.
- You need to have proof of income and other documents like a credit report, employment letters and references.
- The borrower also needs to provide information about their residential status and work permits.
- Depending on the income, lenders may require a co-signer as well.
- A person living in Canada on a work permit can qualify for an OFW loan.
- Tips when Choosing which Bank to Open in Canada
What You Need to Know about Banking in Canada as an OFW
It is not easy to find a bank that is willing to work with consumers from other countries. You need to put in a lot of time doing research and evaluating different banks, but the most of them don’t have any locations outside of Canada. In other words, the only way to conduct financial transactions is either online or with an ATM card.
Getting a bank account
is the initial stage in carrying out your banking business in the Canadian territory. You are free to create an account with any bank or credit union, but it is essential to look for one that welcomes customers from other countries. It is also essential that you determine the kinds of accounts that they provide and whether or not you are eligible for such accounts (e.g., if you have bad credit or no credit history).
Daily banking services
Among these are using an automated teller machine (ATM) or a bank teller to withdraw cash, making deposits, and paying bills online. Since the majority of banks provide the same services, it is essential that you select the banking institution that meets your individual needs. Some financial institutions charge different fees than others, while some still could not accept deposits in foreign currencies (but some do). You also have the option of opening a savings account in addition to a checking account, which gives you the ability to write checks or make withdrawals directly from your account (or both).
You might also get what is basically a loan from your bank by opening up a line of credit. This is helpful if you need to make substantial expenditures that your current available amount in your checking account might not be able to pay (e.g., buying a car). Due to the fact that the majority of financial institutions apply interest to loans obtained through lines of credit, it is in your best advantage to settle these debts as quickly as you can.
Sending money to loved ones and friends who live in other countries is another useful service provided by your financial institution. Because banks typically have links with financial institutions located all over the world, they are typically able to conduct low-cost international money transfers. Additionally, they offer worldwide branches, which you can physically visit in order to carry out transactions such as deposits or withdrawals (if you need cash while traveling).
When it comes to paying bills online, banks are another excellent option. The majority of banks now provide online bill pay, which enables you to quickly and conveniently set up automated payments for a variety of monthly costs, including credit cards, utilities, and more. You have the option of scheduling one-time payments or payments that occur at predetermined intervals (e.g., every week).
In addition, banks provide customers with a variety of borrowing choices, such as personal loans and mortgages. When applying for one of these loans, you may use your savings or bank deposits as collateral. Your interest rate will be determined by your credit score in addition to other aspects of your financial situation, such as your income and the proportion of your income to your total debt.
Reducing your banking costs
Banks offer a variety of ways to reduce your banking costs, including:
- Free checking accounts that don’t require a minimum balance.
- Savings accounts with no fees if you maintain a minimum balance.
- Debit cards with no fees.
- Credit cards that offer lower interest rates and other perks if you pay your balance in full each month.
- Online banking makes it easier to manage your accounts, including paying bills and transferring money between accounts.
Choosing the right bank services for you
You should already be aware by now that doing so can help you save a large amount of money. If you are having difficulties paying your payments, you should discuss seeking assistance from your bank.
There are a lot of financial institutions that provide free financial education classes and other resources to help their customers better manage their money. In addition, if you are having problems managing your money on your own, you may be able to get referred to local credit counselling services by some financial institutions. These agencies offer guidance on how to create a budget as well as access to debt management plans.
Some factors you should look out for when choosing a bank are:
Monthly fees: There is typically a fee associated with opening and keeping a checking account at most Canadian financial institutions. This price can range anywhere from $5 CAD to $30 CAD every month, with the exact amount being determined by the number of transactions you want to do in a given month.
At the same time, the banks may offer to have the monthly fees waived if you have a minimum balance in your account or meet some other criteria, such as maintaining a certain number of recurring deposits or direct debits. Additionally, the banks may offer to have the monthly fees waived if you have a certain number of recurring deposits or direct debits.
ATM charges: In most cases, you won’t have to pay a fee to use an ATM that belongs to one of Canada’s major banks. However, if you use the ATM of another bank, you can be required to pay a set fee for each transaction of this kind. Therefore, in order to circumvent this cost as much as possible, you should select a financial institution that has a sizable ATM network that is spread out across Canada.
Interac e-transfer: It’s a payment method that’s utilised by a collection of banks and retailers in Canada to send money online utilising the recipient’s email address as the only piece of information required. You don’t even need the recipient’s bank information to complete the transaction. However, in order to make use of this system, both you and the recipient need to possess a bank account in Canada that is equipped with the relevant functionality. If your bank does not charge for Interac e-transfers, then you will not be required to pay the one dollar Canadian fee that is typically associated with each transaction.
CDIC insurance: Your deposits of up to $100,000 CAD at a Canadian financial institution are protected by the Canada Deposit Insurance Corporation (CDIC), which operates similarly to the Federal Deposit Insurance Corporation (FDIC). Your deposits in your savings account, checking account, and accounts denominated in foreign currencies, such as US Dollars, are protected by the insurance policy (USD). Verify that the financial institution you intend to open an account with is a member of the CDIC.
OFW banking is designed to meet the needs of temporary workers in Canada.
The OFW Banking is tailored to fulfil the requirements of temporary employees in Canada. The banking services available to OFWs come with several advantages, including the following:
- No pre-qualification: An OFW loan does not need you to pre-qualify for the loan. You may easily submit an application for the loan at the financial institution or credit union that is located in your immediate area, and you will be granted permission to borrow a predetermined sum of money depending on your current level of income and costs.
- No annual fee: Workers from the Philippines who are employed outside of the country are exempt from having to pay an annual fee for their bank accounts or credit cards. This might save you a few hundred bucks over the course of a year.
- Low-interest rates on savings accounts: The interest rates that are offered on savings accounts and money market funds by OFW banks are often quite low. Even though the interest rate may be as low as 0.25 percent, it is still significantly greater than the 0.1 percent or below that you would find at a bank or credit union in Canada.
- Low-interest credit cards: OFW banking also provides credit cards with low interest rates and no annual fees. If you maintain a balance on your credit card throughout the year, these credit cards can save you hundreds of dollars in interest payments each year.
Newcomers to Canada can get loans for purchasing new or used vehicles.
If you are new to Canada and are interested in purchasing a vehicle, you have a number of choices accessible to you. The Canadian government has, in point of fact, established a scheme known as the Auto Loan Program that is targeted primarily for newly arrived immigrants as well as international students (ALP). This loan programme makes it possible for borrowers to purchase new or used vehicles at competitive interest rates, provided that they satisfy all of the eligibility conditions and can provide evidence that they are able to make payments on time.
If a person has a permanent job, getting an interest-free loan from the bank is possible without providing collateral.
If you have a job that will last for the foreseeable future in Canada, you may be eligible for an interest-free loan from the bank that does not require collateral. The following are the requirements that must be met:
- You must have a steady income. This can come from your job or from other sources such as investment income or rental property income. For instance, if you own an apartment complex and rent out units at market prices for at least a year, then you can use this revenue as proof of income when applying for a loan from a bank.
- Your credit history must show that you have consistently paid bills on time over at least one year (if not more). The most convincing evidence of this can be provided by ensuring that your regular monthly payments are deducted in a timely manner from your bank account. In this way, no record of late payments will be left behind with any organisation or business, including Visa or Mastercard or any other similar entity. You should also make every effort to keep all of your other accounts open for the longest period of time feasible. This will allow them to maintain their age and longevity, which will assist them offer better scores when calculating yours in the future when you apply for larger loans such as mortgages! It makes logical, right?
You need to have proof of income and other documents like a credit report, employment letters and references.
- You are need to present evidence of your income in addition to other documents such as a pay stub or a letter from your employer.
- Your credit history is detailed in the reports that are called credit reports. Lenders can determine whether or not you have a positive history with money and whether or not you have been on time with your bill payments based on your credit report. This information is used by lenders in the process of determining whether or not to provide people loans (and what interest rate they will charge).
- A lender will perform what is known as a credit check on you before loaning you money for something such as a car or house in order to determine whether or not it would be financially dangerous for them to lend you money in the first place.
The borrower also needs to provide information about their residential status and work permits.
In addition to that, the borrower is responsible for providing details regarding their residential status and any work licences they may have. The creditor will have to confirm the borrower’s residential address, as well as the borrower’s job standing and the specifics of their employment visas. This is essential since the aforementioned aspects will have an impact on the manner in which they can be repaid in the event that there are any difficulties in repaying the loan on the scheduled date or at all.
Depending on the income, lenders may require a co-signer as well.
It is feasible to obtain a loan without the assistance of a co-signer if you have a reliable source of income and an excellent credit history. However, the need that you have a co-signer could be imposed on you by certain lenders if the terms of your financial loan are particularly stringent.
Someone who is willing to be accountable for the debt in the event that it is not paid is known as a co-signer. The necessity of employing one is determined by a variety of reasons, one of which is the required sum of money in addition to any other financial commitments (such as mortgages). If you are in need of one, your best choice is to find someone who has been residing in Canada for an extended period of time; in this way, they will be able to offer evidence that they are not planning to leave Canada in the near future and will not suddenly vanish with all of your money. The individual must also be an adult and a citizen or permanent resident of Canada; however, they do not need to be related to you or currently reside in the same household as you. However, they must live within a radius of one hundred kilometres of the location where the loan transaction will take place (for example: Toronto).
When applying for loans or credit cards, the connection that exists between the borrower and the co-signer differs from lender to lender (and bank to bank), but the majority of the time, both parties are required to sign everything jointly. This means that in addition to signing jointly as “co-borrowers,” both parties are equally accountable for repaying debts in the event that either party decides not to pay them back while still within the terms of the contract.
A person living in Canada on a work permit can qualify for an OFW loan.
You are eligible to submit an application for an OFW loan if you are currently residing in Canada on the basis of a valid work permit. The bank will need a copy of your credit record as well as your work permit. For the borrower to be eligible, they need to have an employment that is full-time and permanent in Canada. Additionally, the borrower is required to show documentation of their income, such as pay stubs and tax returns dating back at least three years (or five years if you were working overseas).
Tips when Choosing which Bank to Open in Canada
1. Set Your Priorities
Before choosing a bank, it is essential that you make a list of the factors that are most important to you. Investigating the prerequisites set forth by your employer is an excellent place to get started. If they give you a list of banks to choose from, it will be much simpler for you to select the best one for your needs.
2. Identify the Banks
After you have determined which financial institutions are included on the list provided by your employer, it is time for you to begin analyzing them. This can be accomplished by looking at the company’s website, reading reviews, and speaking with others who have previous experience working with these establishments.
3. Check the Requirements
Next, you need to check the requirements of each bank that you have identified. This includes looking at their minimum deposits, interest rates and fees. It is also important to consider whether or not they have branches in your area as well as what kind of perks they offer their customers.
4. Read the Fine Print
It is imperative that you read the tiny print while comparing the many financial institutions that you come across. This will help you avoid being shocked by fees or other limitations that could impair your capacity to earn interest on your savings. Avoiding being surprised by fees or other requirements will help you avoid being surprised.
5. Compare the Fees
The following step is to examine and contrast the various fees that are levied by the various banks. This includes taking a look at the requirements for the minimum balance as well as any other forms of fees that you could be required to pay. Once your money has been deposited, you should also think about whether or not there are any limitations placed on what you may do with it and whether or not those limitations are acceptable to you.
6. Look for Perks and Discounts
Last but not least, you need to investigate the benefits and savings opportunities provided by each financial institution. Anything from free checking accounts to cashback on transactions made with your debit card could fall under this category.
We hope that you have found this guide to be both helpful and enlightening. We are very interested in learning about your personal experiences as an OFW banking in Canada. Please share them with us.