10 Things That Will Shock You About Canada Banks | Canada Couple

Canada Couple

7 Oct 202011:21

Summary

TLDRThis video discusses key differences in banking systems, particularly comparing practices in India and Canada. It highlights the lack of interest offered on current accounts in Canada, and the common use of savings accounts, contrasting this with Indian banking norms. The video also explains banking fees, interest rates, and account options available to new immigrants in Canada. It emphasizes the importance of having both credit and debit cards and explores various savings strategies, concluding with tips for navigating banking as a newcomer in Canada.

Takeaways

😀 Moving to a new country introduces differences in banking systems, especially between checking and savings accounts.
💰 In some countries, people aren't aware that checking accounts do not earn interest, so everyone uses savings accounts instead.
🏦 Interest rates on savings accounts in many countries, like Canada, are much lower than in India, often around 2%.
🔄 Many banks charge monthly fees for maintaining accounts, even for zero-balance accounts, which is uncommon in India.
📦 Some Canadian banks offer incentives like free safety deposit boxes for newcomers, helping with secure storage of valuables.
💳 Having multiple credit cards is essential in countries like Canada to build a strong credit history.
🔍 Canadian banks often require different account setups, like checking accounts for transactions and savings accounts for interest.
📝 When renting apartments in Canada, credit scores and proper account management are crucial for approval.
🌐 Online banking in Canada often requires security mechanisms like email verification and secure transfers, differing from practices in India.
🏦 Canadian banks have streamlined processes for deposits, withdrawals, and checks, unlike separate lines for transactions in India.

Q & A

What is the primary focus of the video?
-The video focuses on the differences between the banking systems in Canada and India, especially when someone moves to a new country.
What banking accounts are commonly used in India?
-In India, most people use savings accounts, while current accounts are less common, and many are unaware of the differences between the two.
What is a key difference in interest rates between Canadian and Indian banking systems?
-In Canada, interest rates on savings accounts are generally lower, approximately 2%, which is much less than what is commonly offered in India.
How do current and savings accounts function differently in Canada?
-In Canada, a current account (or checking account) is used for transactions, while savings accounts are for storing money and earning interest. Some banks even charge fees for using checking accounts.
Why is it important to have a credit history in Canada?
-Credit history is crucial in Canada for financial transactions like renting apartments or getting loans. It helps build trust with lenders and service providers.
What should newcomers to Canada be aware of when opening a bank account?
-Newcomers should be aware that some Canadian banks charge monthly fees for checking accounts, and they may need to maintain a certain balance or pay a fee for specific services.
What advice is given regarding the use of credit cards in Canada?
-It is recommended to have at least two credit cards (one Visa and one MasterCard) to ensure you have coverage at various outlets. Using credit cards responsibly helps build a good credit score.
What are some hidden charges in the Canadian banking system that differ from India?
-In Canada, banks may charge fees for using ATMs from other banks, maintaining checking accounts, and other services like deposit boxes, which is less common in India.
What is the significance of debit cards in Canadian banking?
-Debit cards are commonly used in Canada for transactions and ATM withdrawals. Unlike India, debit card usage might come with fees, especially when using ATMs of different banks.
Why is it suggested to have both a savings and checking account in Canada?
-It’s advised to have both accounts because savings accounts earn interest but are not ideal for regular transactions. Checking accounts, while less likely to earn interest, are used for day-to-day transactions.

Outlines

00:00

🏦 Introduction to Banking Systems in a New Country

This paragraph discusses the initial experience of moving to a new country and adjusting to its banking system. It highlights the differences in banking practices, such as people using savings accounts instead of current accounts and the surprising discovery that current accounts do not earn interest. The paragraph also touches on how transactions and the interest rates in foreign banks are much lower than in India, giving specific examples of differences in banking habits and fees.

05:00

📧 Transferring Money and Online Banking in Canada

The second paragraph explains the money transfer processes in Canada, particularly the ease of transferring money using email IDs instead of bank details. It compares this system with Indian banking, describing how transfers in Canada often do not require IFSC codes or account numbers. The paragraph also mentions how lines at banks in Canada are much shorter and more efficient than in India.

10:00

💳 The Importance of Credit Cards in Canada

This section stresses the significance of having credit cards in Canada and how they are critical for building credit history, which is essential for securing rentals or loans. It recommends having at least two credit cards—one Visa and one MasterCard—for different situations. Additionally, it touches upon the challenges of using only a debit card for certain transactions and the role of credit in improving financial standing.

Mindmap

Keywords

💡Banking System

The 'Banking System' refers to the network of institutions that provide financial services such as savings, checking accounts, and loans. In the video, the speaker contrasts the banking systems of different countries, particularly highlighting how the current account and savings account systems work differently across regions like India and Canada. For example, current accounts in some countries might not offer interest, while savings accounts have varying interest rates.

💡Savings Account

A 'Savings Account' is a type of bank account that accrues interest on the money deposited in it. The video emphasizes how in India and other countries, most people rely on savings accounts for everyday banking. Interest rates for savings accounts are generally low, but they differ across banks and regions. The speaker discusses how, in places like Canada, the interest on savings accounts can be as low as 2%, which is comparatively lower than what is offered in India.

💡Current Account

A 'Current Account' is primarily used for day-to-day banking and transactions, typically offering no or very low interest. The video notes how many people are unaware of the differences between savings and current accounts, and that in countries like India, people often mistakenly use savings accounts for daily transactions instead of current accounts. It points out that current accounts are often free from interest, which contrasts with savings accounts that provide a return on deposited funds.

💡Interest Rate

The 'Interest Rate' refers to the percentage at which interest is paid on money saved or borrowed. In the context of the video, interest rates on savings accounts vary widely between countries, with Canadian banks offering significantly lower rates than Indian banks. This concept is important as it shapes people's decisions on whether to save or invest their money in different types of accounts.

💡Transaction Fees

'Transaction Fees' are charges imposed by banks when a customer performs a specific financial operation, such as transferring money or withdrawing cash. In the video, the speaker highlights how banks in countries like Canada might charge monthly fees for maintaining an account or making certain types of transactions, whereas in India, many people expect zero-balance accounts with no transaction fees.

💡Zero-Balance Account

A 'Zero-Balance Account' is a type of bank account where the customer is not required to maintain a minimum balance. The video mentions how zero-balance accounts are common in India, particularly for new employees or low-income individuals. This is contrasted with the banking system in countries like Canada, where even basic accounts might charge a monthly fee if a minimum balance is not maintained.

💡Deposit Box

A 'Deposit Box' is a secure container provided by banks where customers can store valuables like jewelry and important documents. The video touches on how certain Canadian banks offer deposit boxes as part of their services, often free for the first year, which is useful for newcomers to the country who may have valuables they wish to protect during their transition.

💡Credit Score

A 'Credit Score' is a numerical representation of a person's creditworthiness based on their financial behavior, particularly in terms of paying off loans and managing credit. In the video, the speaker discusses the importance of building a strong credit score in countries like Canada, as it affects one’s ability to rent apartments or take out loans. The speaker also advises getting at least two credit cards to help build credit history.

💡Checking Account

A 'Checking Account' is used for frequent transactions, such as deposits and withdrawals, without limitations on the number of transactions. The video points out how checking accounts in Canada are used for daily financial operations, and that some banks charge fees for these accounts, which differs from savings accounts that limit transactions but offer interest.

💡Credit Card

A 'Credit Card' allows users to borrow money up to a certain limit to make purchases or withdraw cash, with the requirement to pay back the borrowed amount, often with interest. The speaker in the video advises getting multiple credit cards to help build a credit score, which is essential for financial stability in countries like Canada. Unlike debit cards, credit cards help build a person's financial credibility.

Highlights

The banking system in a new country can be very different from what people are used to, such as checking accounts not gaining interest.

In India, many people are unaware of the difference between savings accounts and current accounts, and everyone uses savings accounts.

Interest rates for savings accounts in India are generally higher compared to other countries like Canada.

Current accounts in Canada may come with fees if you do not maintain a minimum balance, which can be surprising for newcomers.

Opening a bank account in Canada may require a deposit of $5 to $230, depending on the bank's policies and services.

Some Canadian banks offer incentives like $300 for opening a new checking account under certain promotional programs.

Banks in Canada often charge a monthly fee for maintaining accounts, which can be unusual for people from countries like India.

Canadian banks offer safety deposit boxes, which are important for newcomers who may need to secure valuable items like jewelry.

In Canada, making transactions from a savings account may incur fees, so using a checking account for daily transactions is recommended.

There are special offers in Canada for new immigrants, like waived fees for the first year for certain accounts.

To build a good credit history in Canada, it is important to use credit cards responsibly, pay bills on time, and avoid overspending.

Having multiple credit cards, such as both a Visa and a Mastercard, can be beneficial in Canada due to varying acceptance at different outlets.

Using a debit card to withdraw cash from ATMs outside your bank network may incur fees, which is different from the system in India.

Banks in Canada are more streamlined, with fewer lines for different services compared to banks in India, making transactions faster.

In Canada, transferring money to another person can be done easily through email, a method not commonly used in countries like India.