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Banking in Canada

In this section, we will explain how banking in Canada works, and provide useful terms and definitions that may help you understand our system. 

Selecting a bank

Debit accounts, Interac and credit cards

  • What is Interac?
    Interac is a way in which business and banks in Canada transfer money from accounts electronically. When you use your debit card to purchase an item in a store, you are making an Interac transaction. 
  • The difference between a debit card and a credit card

    Credit cards and debit cards may be different here than what you are used to back home. 

    credit card can be used as a form of payment. You are given a credit limit and can spend up to that limit. You pay back the balance on the card at a later date. Each month, you are required to make a minimum payment depending on the balance of your card. You will also receive a credit card statement, which also shows your available credit. Interest is added to the balance of your card. Typically, people look for cards with very low interest rates, or rates that are compounded monthly. 

    For example, Student A needs to purchase her textbooks, which cost $200 today, but doesn’t have enough money in her bank account. She will receive her paycheque in a month. She has a $500 limit on her credit card, so she uses her credit card to purchase her books today and then pays back the balance ($200) on her card in a month. However, she now also has to pay interest on the $200, so she actually pays $203 for her books. 

    With a debit card account, you have already deposited the money into your account and are using your own money. Many banks offer a student debit account; however, there are other types of accounts, including a variety of savings and chequing accounts. Please note: Debit cards cannot be used to make online purchases or payments; a credit card is required for this. 

Opening a bank account

  • Factors to consider when opening a bank account

    Make sure to check all of the following before opening any account:

    • exchange rates – especially if your family is sending you money from home or you intend to send money home (ensure you get a good rate)
    • handling fees
    • interest rate
    • international money transfer options and associated fees
    • minimum monthly balance
    • monthly and annual fees
    • online banking options (this includes timelines to process a transaction online, and fees per transfer)
    • overdraft amount and penalties
    • record-keeping fees
    • telephone banking options
    • transaction fees
  • Required documents to set up a bank account

    As an international student, you will require:

    • study permit
    • passport
    • student ID or Verification of Enrolment Letter (your Letter of Acceptance to the University of Ontario Institute of Technology can also be used)
    • postal address, phone number and other basic details

    Please note: If you are an exchange student here for six months or less, you likely do not have a study permit, so opening a bank account can be difficult. If you need assistance, email

Credit cards

  • Factors to consider when applying for a credit card
    • Compare interest rates of credit card companies.
    • Look for annual fees (which you will be charged, whether you use the card or not).
    • Look at how the interest is compounded. Do you start paying interest the moment you make a credit card transaction, or is there a grace period where no interest is charged (typically 21 to 25 days)?
    • Does it come with travel or other forms of insurance?
    • Does it come with cash advances? This is a transaction that allows you to change your credit into cash. There is usually a fee associated with this service which you should inquire about. 
    • Some credit cards will offer extra savings in order to get your business. For example, they may waive interest for a certain number of months on your purchases or provide a very low interest rate for your first year of use. 
  • Credit card companies

    There are many credit card companies. Below is a list of a few of your options:

    • American Express
    • Bank of America
    • CapitalOne
    • CitiBank
    • MasterCard
    • Visa

    The documents required to set up a credit card vary greatly from one company to another, so inquire with each one.

Terms and definitions

  • Terms and definitions

    Credit limit: The maximum amount of money you have available to spend on your credit card. 

    Credit card balance: The amount of money you have borrowed on your credit card. 

    Minimum payment: The amount of money you are expected to pay on your balance for a given period of time (typically each month).

    Available credit: You credit limit minus your credit card balance equals your available credit.

    Interest: This is the additional money you need to pay on top of the money you borrowed on your credit card.

    Online banking: Lets you manage your money when it's convenient for you. You can view balances and transactions, pay bills, stop cheques, transfer funds between accounts, send cash electronically and much more over the Internet. You typically need to set up the online banking function when you set up your bank account.

    Interest rate: The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

    Overdraft: An extension of credit from a lending institution when an account reaches zero. An overdraft allows the individual to continue withdrawing money even if the account has no funds in it. Basically, the bank allows people to borrow a set amount of money. For example, your banking institution may allow a $200 overdraft (you can withdraw $200 even if your debit account is empty).

    Monthly and annual fees: Fees deducted every month directly from your account.

    Transaction fees: Fees associated with every transaction. For example, every time you use your debit card in a store to make a purchase or pull out cash from a machine, this counts as a transaction and you may be charged a fee. 

    Handling fees: Fees associated with ATM withdrawals not made at your own bank.

    Minimum monthly balance: The minimum amount of money you need to keep in your account at all times to avoid getting hit with a monthly fee. 

    Record-keeping fees: Fees associated with keeping all your transaction details.

    Certified cheque (or certified check): A form of cheque where the bank guarantees to the recipient that you have the money available to cover the cheque. Once the bank has verified your account has the funds to cover the cheque amount, the bank sets the funds aside in the bank's internal account until the cheque is cashed or returned by the payee.

    Money order: A payment order for a pre-specified amount of money. The funds must be prepaid for the amount shown on it. There is a charge associated with getting the bank to issue a money order. They typically ask who the money order is addressed to, and include this person’s name on it. That way, the individual (or company) is the only one who can access the funds when they take the money order into the banking institution. It is a much safer method of payment than a regular cheque.

    Bank draft: Refer to Money order.

Payments to the university