How does the Canadian financial system work?

Are you a newcomer to Canada or planning on coming here soon? Here’s a list of key financial terms to help you understand the basics of the Canadian financial system.

To make it easier to access and use payment solutions in Canada, we recommend opening an everyday transaction account as soon as you’ve chosen a financial institution.

In Canada, there are two main account types everyone should know about: everyday accounts and savings accounts.¹

An everyday account (also called a chequing account) is a basic account that allows you to get a debit card, receive your paycheque and carry out your day-to-day banking. For example, you can:

• Make deposits and withdrawals, transfer money between accounts, pay bills and make purchases using a debit card*
• Transfer money to and from your home country²

Once you arrive, you’ll be able to access a number of features via our online or mobile services. For example, you’ll be able to:

• Check your everyday account and credit card balances
• Transfer money between your own accounts or to other people, both in Canada and abroad^2,5
• Pay your bills and schedule payments
• Set up regular contributions to a savings account⁵

Account you can use to set money aside for a short-, medium- or long-term project. A savings account can be useful for growing your money, building an emergency fund or saving up for a big goal, such as taking a trip or buying a property. There are different types of savings accounts to suit different financial goals. These accounts are available subject to certain conditions. You can set up automatic transfers to help you grow your money.

In Canada, some of the most common payment methods are debit card, credit card, cash, Interac e-Transfer and cheque. That said, cheques are less common these days, and are not always accepted.

At Desjardins, when you open an everyday account, you can request a debit card at the same time. One of the main things to know about your debit card is that the money comes out of your account as soon as you complete the transaction. You can use your debit card to pay for purchases you make in stores, or to withdraw cash from automated teller machines (ATMs).⁵

A credit card lets you borrow money from your financial institution to make purchases. The amounts you charge need to be repaid, ideally in full, before the grace period on your monthly statement.

You can learn more about Desjardins credit cards and see the terms and conditions that apply on the following page: Compare our Visa and Mastercard credit cards.

Paying your bill in full every month is key. If you’re still carrying a balance after the due date mentioned on your statement, fees will apply to the original amount and will be calculated from the date each purchase was made. Some credit cards are free. Other cards come with an annual fee, but give you various benefits in return.

Credit cards are often used for making online purchases, renting a car, paying for activities and events, and planning vacations that may require you to book plane tickets and accommodations. Using a credit card also helps you establish your credit history and credit score in Canada.

However, it’s important to be careful with credit cards—using them the wrong way can be costly. That’s why it’s crucial to use them responsibly.

Cash isn’t accepted everywhere, but it’s more convenient in certain situations. For example, when making a smaller purchase from a convenience store, neighbourhood market, bar or café, it’s not unusual to pay in cash. The same is true for cab rides and bus fare.

Interac e-Transfer is a service that lets you send money easily and securely to another person or business via text message or email. You can also use the service to pay your rent.

Cheques may not be as common as other payment methods, but you can still use them to pay for things like rent, tuition, sports activities and services from some medical doctors and specialists.

In Canada, cheques are good for six months after they are issued.

When you deposit a cheque, you’ll see the money in your account right away. However, depending on the terms and conditions of your account, you may not have access to the full amount for a few days. That’s because a portion of the funds may be placed on hold. Your funds will be available once the cheque has been processed.

In Canada, your payment history and how you use credit over time help build your credit report.

Your credit report also contains a credit score. Lenders, insurers and service providers such as cellphone and utility companies (for example, Hydro-Québec) may consult your credit report or check your credit score to decide whether you can be approved for a loan or other credit. In other words, it’s in your best interest to adopt good financial habits from the beginning.

Creating a budget is a great way to gain a better understanding of your new financial world. It can help you get a sense of where your money is going, and a clear picture of your regular income and expenses. As a result, you’ll be able to make better decisions, make the most of your new life in Canada and set goals for the future.

Desjardins even has a special budgeting tool to help you create your budget.

¹ Certain conditions, limitations and exclusions apply.

² Subject to certain conditions and the availability of transfer options to the countries selected. Full details are available on this page.

³ This offer is available upon request and is subject to change without notice at any time. Other terms and conditions may apply. Contact an advisor to see if you’re eligible for this offer.

⁴ This offer is subject to change and may be terminated at any time without notice. Certain conditions apply.

⁵ Certain conditions and service fees may apply. Consult our guide to service fees for more information.

Interac^® and Interac e-Transfer^® are registered trademarks of Interac Corp. Used under licence.

* Additional fees of $1.50, $3 or $5 may apply to withdrawals made from non-Desjardins ATMs affiliated with the Interac and PLUS networks. Some ATM operators also charge their own fees for using their machines. They must notify you via an on-screen message before processing the transaction. You then have the option of cancelling the transaction. These fees are added to the withdrawal amount and are paid directly to the ATM operator. For more information, see the Service fees page.