A 2004 study noted that some Aboriginal people have never had contact with a financial institution nor had their parents. Financial institutions offer many benefits for managing your money; it’s unfortunate that many Aboriginal people do not access them.
Having an account for your money with a financial institution is one way to keep your money safe, help you save, and manage your finances. After reading this section, you will have a good understanding of the following concepts:
- Types of financial institutions.
- What accounts are and how you can use them.
- How to open an account.
Even if you do not have a bank account, you can still cash a Government of Canada cheque in your name that is under $1,500 for FREE at any financial institution that has tellers. Examples of government cheques include goods and services tax (GST) credits; income tax refunds; old age security benefits; employment insurance; and child tax credit benefits.
10.2 Different Types of Financial Institutions
In Canada, there are several different types of financial institutions. The two main institutions people are most familiar with and tend to access are Banks and Credit Unions.
Both keep your money safe and offer services like low cost bank accounts, chequing accounts, savings accounts, life insurance, mortgages, and loans.
The main difference between banks and credit unions is ownership. Credit unions are non-profit organizations owned by their customers, who are called ―members‖.
Another difference is that banks are subject to federal laws while credit unions are subject to provincial laws.
10.3 Common Questions about Opening an Account
Who opens an account?
Anyone can open an account. Although there is no law that requires you to put your money into a financial institution, there is Canadian law that gives everyone the right to open a deposit account with a financial institution. Here are some things you should know:
You can open an account even if:
- You do not have a job
- You don’t have money to put in your account right away
- You have been bankrupt
- You have a criminal record You owe money
A bank or credit union may refuse to open an account for a person if:
- The person doesn’t provide proper identification.
- They have reasonable grounds that the account will be used to commit fraud or illegal activities.
- The person has committed fraud or other illegal activities in the past 7 years.
- The most common type of fraud is making a fake deposit.
- Making a fake deposit is when you use your bank card at an ATM to deposit an empty envelope but claim to be depositing money.
- They think the person trying to open the account is misrepresenting information (not being truthful about the questions they need answered to open an account).
- They think the person trying to open the account is a threat to other customers or employees and may cause physical harm, harassment, or other abuse.
If a financial institution refuses to open a personal account for you, they must tell you of the refusal in writing. The bank must also tell you how to contact the Financial Consumer Agency of Canada.
What type of account do I need?
Most financial institutions offer different types of accounts, such as chequing accounts and savings accounts. The type of account you need depends on your circumstances.
Some questions to consider when deciding which account is right for you include:
- Do you own a home business?
- Do you write cheques?
- Are you trying to save money?
- Do you have good credit?
- Do you have children?
- Do you need life insurance?
- Do you use your bank card frequently?
The best way to figure out what type of account you need is to talk to a professional at your financial institution. Together you can discuss your goals and needs and decide what type of account will work best for you.
When is the best time to open an account?
Well, it’s never too early and never too late to open an account. If you have money, want to save money, or need money, it’s time to open an account.
Where do I go to open an account?
You can go to any financial institution to open an account. You want to make sure the institution can meet your needs and has a good reputation. Shop around to see what financial institutions in your area provide the services you need.
Why should I open an account?
People open accounts for different reasons. The main reasons are to keep your money safe and to build credit. Have a look at the video clip ―Why Open an Account?‖ in the Learning Resources list. This clip highlights a variety of reasons you may want to open an account.
10.4 How to Open an Account
To open an account, you need to go into the branch where you’d like to open an account in person. You need to bring your identification with you. All financial institutions require specific identification to open an account. Below are the choices for identification as published by the Financial Consumer Agency of Canada.
Choice 1 – Show two pieces of ID from List A:
- Canadian driver's license
- Current Canadian passport
- Canadian birth certificate
- Social Insurance Number (SIN) card
- Old Age Security card with your Social Insurance Number (SIN) on it
- Certificate of Indian Status
- Provincial or territorial health insurance card (this cannot be used in Ontario, Prince Edward Island or Manitoba)
- Certificate of Canadian Citizenship or Certification of Naturalization
- Permanent Resident card or a Citizenship and Immigration Canada form IMM 1000, IMM 1442, or IMM 5292
If you don't have two pieces of ID from List A above, you can use choice 2 or 3.
Choice 2 – Show one piece of ID from List A and one piece of ID from List B, below:
- Employee ID card with your picture on it
- Debit card or bank card with your name and signature on it
- Canadian credit card with your name and signature on it
- Client card from the Canadian National Institute for the Blind with your picture and signature on it
- Current foreign passport
Choice 3 – Show one piece of ID from List A and have someone the bank knows confirm that you are who you say you are.
Once you provide your identification to the teller, they will ask you a series of questions to identify what type of account will best suit you.
This process could take some time so it’s important to make an appointment with your financial institution. This ensures that both you and your financial institution set aside the time required to open an account.
Watch the video clip titled ―Opening a Bank Account‖ under the Learning Resources to see, step by step, what is required to open an account.
10.5 Learning Resources
Visit this page on the Financial Consumer Agency of Canada’s website to explore what type of savings or chequing account is right for you.
The following link provides an overview of reasons why you may want to open an account:
This link walks through step by step how to open an account:
10.6 Tips just for you...
It’s never too early to start building your credit. By opening an account you can begin to build a relationship with your financial institution and build your credit at the same time. There are many benefits for a young person opening an account. Here’s how you can learn more:
1. Make a list of all the questions you have about banking and opening a bank account.
2. Do an Internet search on the financial institutions you want to know more about. You may want to choose a branch close to where you live or work. See if you can find answers to your list of questions.
3. If you still have questions call the financial institutions, they’d be happy to help.
4. Make an appointment at the financial institutions you are considering. Making an appointment ensures the staff will set aside the time to sit with you and go through your questions.
5. Talk to friends and family members that you trust. Is there someone you admire because of their ability to manage their money? Talk to them and get advice on how they chose a financial institution.
Juggling all your family responsibilities can be overwhelming. Kids, soccer practices, walking the dog, getting groceries, making dinner…ugh who has time to pay bills!?
You do! Have you ever thought about online banking? When you bank online you can set up your bills to be paid automatically on your payday. Canada Post even works with financial institutions to deliver free online mail. You can receive, print, pay, and store over 200 bills. This free online mail service delivers phone, hydro, cable, and credit cards bills all online.
If you have a phone and computer and are registered with your financial institution for online banking, you have everything you need to simplify paying your bills. Call the number on the back of your debit card and the customer service representative can walk you through how to set up automatic bill payments.