Canada’s Best Banks Reviewed

The Canadian banking market is one of the most stable and reliable in the world so it’s no wonder that millions of people open and manage their accounts here each and every year.  Unlike many other countries, a small number of banks control most of the industry in Canada so while reliable, there isn’t as much flexibility and competition as other countries.  While that’s the case, the good news is that over the last 10 years market competition has increased quite a bit which means banks are offering better deals to consumers (good news for us) when opening accounts.

Here’s A Look At Our Top 5 Canadian Banks

RankBank NameAssetsBest For
#1TD Canada Trust$1104 BillionProfessionals
#2Tangerine$40 BillionLow-to-No Fees
#3Scotiabank$856 BillionStudents
#4Bank of Montreal$641 BillionEverday Banking
#5Royal Bank$1074 BillionWealth Management

In addition to our top 5 banks listed above, there are a number of other banks and credit unions available in Canada.  Below is a look at some other popular options used by Canadians:

Other Canadian Financial Institutions
CIBCDesjardinsManulife Bank
HSBCAlterna BankICICI Bank
Laurentian BankNational BankMotus Bank

Types of Bank Accounts Compared

Canada has a robust and secure banking system that can meet virtually any need you may have. To make the most of the tools that it places at your disposal, it is important to have a basic understanding of the types of accounts Canadian banks offer so that you can make the wisest choices to meet your personal financial goals.

The most common types of accounts offered by Canadian banks include:

  1. Chequing Accounts
  2. Savings Accounts
  3. Newcomers Accounts (Recent Immigrants)
  4. Student Accounts
  5. U.S. Dollar Accounts

Chequing Accounts

Often referred to as banking or transaction accounts, chequing accounts are primarily used to take care of your basic, day to day, banking needs. Most come with a debit/ATM card.

Advantages:

  • Allow point of sale purchases without the need to carry cash
  • Allow 24-hour access to your money through ATMs
  • Allow bill payments through ATMs, on the Internet or by telephone
  • Generally, have lower transaction/monthly fees and account balance requirements than other accounts
  • Cheque writing privileges

Disadvantages:

  • May charge you transaction fees for teller assisted transactions
  • Pays little to no interest
  • May allow you a limited number of transactions per month
  • Fees may change without notice

Savings Accounts

A savings account can be viewed as zero risk, low yield investment. You receive a set amount of interest on the money that you have deposited in your account, known as your principle. Typically, this is paid on a monthly bases and calculated according to your average monthly balance.

Advantages:

  • Pays higher interest on your money than chequing
  • Pays compound interest allowing your savings to grow over time
  • Secured by Canada Deposit Insurance Corporation (CDIC) for up to 100,000 CAD
  • Funds may need to be transferred to chequing before you can access them at ATMs

Disadvantages:

  • Interest may only be paid after you have reached a certain balance or on an amount above a specified limit
  • Interest may be variable depending on your account balance
  • Number of monthly transactions you are allowed may be limited or subject to higher transaction fees
  • You will owe capital gains taxes on the interest your account accrues

Newcomers Accounts for Recent Immigrants

Moving to a new country can be daunting. Many Canadian financial institutions have accounts specifically designed with features to help ease the transition for new arrivals or those preparing to come to Canada. Features vary depending on the bank but here are some high points both pro and con offered by many institutions.

Advantages:

  • Offer easier access to credit cards, loan products, investments, savings accounts and credit reports.
  • Offer low or no-fee international transfers
  • Grace period on account fees
  • Complimentary safety deposit boxes, for a limited period

Disadvantages:

  • Generally limited to new arrivals, international students and those who have achieved permanent residence within the last five years.

Additional Documentation Required:

  • Forms IMM5292 or IMM5688 (permanent resident card or confirmation of permanent residence)
  • For foreign workers, IMM1422 (work permit)
  • Social Insurance Number
  • 2 valid government-issued photo IDs such as passport or driver’s licenses

Student Accounts

Banks love students. They offer them many perks that the average person only wishes they could receive. Make the most of your time on campus, whether as a part-time freshmen or graduate level student by finding an account that will enhance your financial future. While every major Canadian bank both on and off-line have their own programs, here are a few features you may want to look for.

Advantages:

  • 0 transaction fees
  • 0 monthly fees
  • Unlimited monthly transactions
  • Unlimited Interac e-Transfers
  • Bonus reward points on credit/debit card purchases
  • Scholarship opportunities

Disadvantages:

  • There are very few if any disadvantages to student bank accounts in Canada. The only glaring one is that at some point everyone stops being a student. As with any account, the secret lies in picking one from the many offered, that best suits your lifestyle needs.

U.S. Dollar Accounts

If you or your company does a great deal of business internationally or if you travel abroad frequently it could be advantageous to maintain some capital in U.S. Dollars. The Canadian banking system makes this extremely easy by offering both savings and chequing accounts in U.S. Dollars.

Advantages:

  • It allows you to avoid the 2.5% conversion fee that Canadian banks charge per foreign currency transaction when using U.S. Dollars.
  • It allows you to exchange your U.S. currency back to Canadian dollars when you can most greatly benefit from the international exchange rates.
  • It allows you to use third-party brokerage firms garnering much better exchange rates than most banks offer.

Disadvantages:

  • U.S. dollar accounts in Canadian banks are not connected to the Interac network and cannot do e-transfers.
  • If you do a large number of transactions a month some banks charge a premium fee.
  • If the Canadian dollar (ever) appreciates against the U.S. you would technically suffer an equity loss

Choosing the Right Bank

Though many may think of banks as very impersonal, banking is a very personal thing. Beyond the accounts discussed in this article, they offer a wide array of financial services you might benefit from being able to take advantage of.

That being said, they each also have their own particular strengths depending on the nature of their targeted clientele. This can make choosing the best bank time consuming but well worth the effort.

You should begin by accessing your current and future needs and then gather information on the services provided by, rates paid and fees charged by prospective banks. Don’t forget to consider whether they are more of a community-minded bank or more internationally focused when judging them against your needs. Those whose services most match your needs should be short-listed.

Much of your research can be performed on-line and there are quite a few completely on-line banks in Canada today. After you have developed your short list of prospective banks contact them personally to gain a small sample of what their customer service is like.

Of course, there is nothing that says you have to do all your banking with a single firm but it is much more convenient and there is a lot to be said for building a long-term relationship with a financial institution.

How to Open a Canadian Bank Account

Opening a bank account in Canada is a fairly simple and straightforward process. You will need two forms of ID as mandated by Canadian law. Many forms of identification are acceptable for Canadian citizens and your chosen bank would be the best advisor as to what their institution accepts. Suffice to say, most people will have them in their wallets already. You will need proof of address and an opening deposit.

For None Canadian citizens the process will differ only in that one ID must be from their home country. Some special accounts such as those specifically for immigrants or students will require proof of qualifying status.

You will need to visit a bank branch in person or scan and submit your documents to open an account online. Normally, in total it is less than a half-hour process.

Banking Fees in Canada

Bank fees in Canada can vary widely and are for the most part driven by free-market competition. They can range from as little as $1 to up to $35 for certain types of transactions at select banks. That is one reason it is best to pay close attention to a banks fee schedule before selecting an institution to open an account with.  While there are some low to almost no-fee options like Tangerine in Canada, most banks do charge for various services.  Below is an example of common monthly or one-off fees that are charged to Canadian customers for transactions:

Common Monthly Banking Fees
Account Fee$5.00-$30.00
Foreign Transactions2.00%-3.50%
Interac E-Transfer$1.00
Cancel Payments$5.00-$50.00
Wire Transfer$17.50-$80.00
Foreign ATM Withdrawal$3.00-$5.00
OverdraftFee + Interest
NSF Fee$30.00-$50.00
Safety Deposit Box$50.00-$150.00
Pre-Authorized PaymentsNo Fee