Immigrate to Canada: Financial and Banking Challenges

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Some of our team members have firsthand experience of what it’s like to immigrate to Canada. Moving to this beautiful country is life-changing (in a good way). But proper immigration requires careful planning and some stress management. This is especially true when determining your financial and banking plan upon arrival.

Many newcomers to Canada feel overwhelmed and confused by the drastic change to their finances and, even more so, the banking and credit system. These feelings are normal because financial rules, practices, and products can differ from country to country.

Since there is a learning curve for every immigrant in this regard, this post will help you understand the primary challenges you may face in Canada when establishing yourself financially. Later, we will review some valuable statistics about immigration to Canada too. Read on.

 

Top Financial Challenges After Immigration to Canada

 

 

Everyone experiences stress with Canada’s financial and banking system at some point. Therefore, basic knowledge and preparation are undoubtedly worthwhile to expedite your settlement process upon arrival in Canada.

 

Financial Literacy

Like most countries, Canada’s financial and banking systems differ from others. There is new terminology to learn, various accounts and financial products available, and a new credit system to consider. Unfortunately, most migrants do not prepare for their “financial landing” in Canada.

Reviewing our Glossary will give you a head start on entry-level banking terminology in Canada. This list includes not only a significant number of personal finance terms but business vocabulary as well. Learning these terms will help you save time, money, and even a bit of sanity.

 

High Rental Costs

Renting a house or condo can be challenging for anyone in Canada. This is not an instance explicit to those who immigrate to Canada. However, some newcomers are shocked when they learn of average rental rates, especially those who settle in Canada’s metropolitan areas.

Living downtown can help you decrease your commute time to work and entertainment. The high expense of living in such an area may also quickly deplete your savings.

When searching for your first home in Canada, you may consider living off the downtown core or in a suburb. Rent is noticeably cheaper in these areas. You may also want to consider a place with easy access to public transportation to ease your financial burden upon arrival further.

Tip: Do not buy or lease a vehicle immediately unless you have significant excess funds. Take the time to determine how much you’ll use a car or truck and whether public transportation is a better option.

 

Necessary Documentation

Basic documentation and identification items are generally required to complete most financial setup tasks in Canada. When you immigrate to Canada, you’ll likely have a Temporary Resident Visa (TRV), Work Permit, Permanent Residency card, and Social Insurance Number (SIN). Keep close guard of these items at all times. Losing one (or all) of them could cause severe delays to your settlement in Canada.

Depending on your employment type, you’ll also need a provincial identification card, driver’s license, universal healthcare card, or other licenses. For the accounts you are setting up or financial products you’re applying for, you may need some or all of these documents to prove your identity. Avoid additional stress by having these documents in order and centrally stored for use in a safe place.

 

Mobile Phone and Credit Card

A credit score or history is required in Canada to open accounts such as a credit card or mobile phone line. But unsurprisingly, credit scores are not transferred between countries; some countries do not even consider the idea of credit in their financial systems.

Do not fret. Canada has robust policies that provide migrants with fair opportunities to establish their credit upon arrival. Some Canadian banks offer tailored newcomer packages that include account formation, credit card issuance up to $5000, and mortgage programs.

Do not get pulled into non-bank or third-party credit programs. Often, these less-than-enviable lenders do not report your payments to Canada’s credit bureaus. So you’re essentially paying high-interest rates for no specific longer-term benefit. Always go to the bank first.

 

Finding a Job

Finding a job is vital for everyone who immigrates to Canada. In some cases, migrants already have jobs lined up for their arrival. Other newcomers must look to the open market to find a good professional fit for their skill sets.

Upon arriving in Canada, it is crucial to obtain employment as soon as possible. It is not to say that you have to take any job. But any in-country work history is better than none. If you’re striking out based on professional expertise, look to entry-level positions to get started. This approach will start putting money in your pocket while you look for an ideal role.

There are newcomer centres in every major Canadian city and many smaller urban areas. Take the time to attend new arrival events, meet other migrants, and strengthen your professional network.

Caution: Mind the Financial Fraudsters

Many who immigrate to Canada are initially unaware of how the banking system works. As such, they are particularly vulnerable to financial fraud. And fraudsters use every tool to target and scam migrants who have recently arrived.

Some of these scams involve potential employment opportunities. Given many newcomers are eager to find work in their field, con artists will pose as agency recruiters demanding an upfront fee to place you in an esteemed position. Once the fee is paid, the recruiter disappears. This is a basic example of financial fraud you may face.

Be warned: Do not share your identification, SIN, or other personal details with anyone, especially by text message or email. There are many scams in Canada with actors impersonating government, bank, and corporate personnel.

 

Getting Used to Taxes

Taxes are a good thing in Canada. However, you may not have experience paying annual income taxes because such payments were worked into your home country’s goods and services prices. Canada has a similar system, but it adds yearly income taxes on top of that.

Canada has a 5% Government Sales Tax (GST) on all goods and services, and some provinces have a Provincial Sales Tax (PST) or Harmonized Sales Tax (HST). But, some areas, such as Alberta, do not have PST, only GST, making living cheaper.

Annual income taxes are paid at the beginning of each year. They are calculated based on your previous year’s income, Federal tax rate threshold(s), Provincial tax threshold(s), and any rebates due to you. You must submit your tax return no later than April 30 each year and pay any taxes due by May 2 (or June 15 for self-employed people). In some cases, if your tax due amount is high, you may be required to pay installments over the coming year in anticipation of your future tax obligations. This is a regular occurrence in Canada.

 

Insurance Costs

Whether it be auto, home, life, critical illness, disabilities, or other insurance, such costs can be high in Canada. Sometimes, your credit report may be reviewed to determine your payment schedule with the underwriter.

Remember that carrying the proper insurance needed is essential. This insurance coverage can differentiate between solvency, a Debt Management Plan, or even bankruptcy. You do not want to be held personally responsible in an accident caused by your property or because you fell critically ill or cannot work.

 

Online Banking

Canada has advanced online banking systems. And every bank is similar yet different in its own right. For anyone who immigrates to Canada, all the new functions and features can be daunting.

Take the time to meet with a bank representative to go through all aspects of your online bank account. If you are still learning English or French, request that the bank provide you with a representative who speaks your home language or a translator who can help.

Be sure to understand the risk of financial fraud due to online banking use. Never connect to a public Wi-Fi system and access your bank account. Only access your bank account from one personal desktop computer or laptop. Set up two-factor identification using your mobile number for One-time Password (OTP) authorizations. These individual efforts are the minimum you’ll need to take to protect your online identity and accounts.

Once you’re established with online banking, you’ll see several features. These include Interac e-Transfer, which allows you to send money instantly to anyone with an email address set up on the system. Unfortunately, this is a blessing and a curse; scammers regularly use e-Transfer to con money from unsuspecting migrants. Furthermore, it cannot be recovered once you send money by e-Transfer. So be sure to who you’re sending money.

 

Immigration to Canada: Top Statistics

Millions of people from all over the world have chosen Canada to be their new home. Below, we review some of the top statistics regarding immigration to Canada:

  • Over 8.3 million people (23% of the population) were, or had ever been, landed immigrants or Permanent Residents in 2021.
 
  • Immigrants will be 29.1 to 34% of the population of Canada by 2041.
 
  • 62% of most recent immigrants come from Asia and the Middle East.
 
  • India is the leading country of birth for recent immigrants, containing 18.6% of them.
 
  • The share of recent immigrants from Europe has fallen from 61.6% in 1971 to 10.1% in 2021.
 
  • The share of second-generation Canadians (children of immigrants) younger than 15 years with at least one immigrant parent rose from 26.7% in 2011 to 31.5% in 2021.
 
  • A vast majority (95.8%) of recent immigrants to Canada from 2016 to 2021 were under 65.
 
  • 10.9% of recent immigrants were youth and young adults aged 15 to 24, while most (64.2%) were in the core working age group of 25 to 54.
 
  • Only 3.6% of recent immigrants were aged 55 to 64.
 
  • Immigration contributed to 79.9% of the growth in Canada’s labour force from 2016 to 2021.
 
  • There were 218,430 new refugees admitted as Permanent Residents in Canada from 2016 to 2021.

 

Summary

Canada is a beautiful country with caring people open to the world that protects the rights and freedoms of all. Even writing that sentence made all of us at Creditpicks proud. Though it isn’t a right to immigrate to Canada, doing so could open up many new opportunities for you and your family.

Canada’s population will comprise one-third of migrants by 2041. Our nation’s diversity is our strength, and our continued march toward advancement is achieved through our respect and commitment to each other. You will find a national family and home in Canada. And we hope this guide helps you settle just a bit easier when you arrive.

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