The 3 Most Important Things You Should Know About Canadian Banks

by Josh Biggs in Finance on 11th June 2020

If you are considering moving from the United States to Canada, or even thinking about spending a significant amount of time there, there are things that you need to know about Canadian banks. While there are many similarities with U.S. banks, there are differences, too, and some of these differences may surprise you.

Here are the 3 most important things that you need to know about Canadian banks:

1. There Are Far Fewer Banks in Canada

In America, we are accustomed to having a nearly endless choice of banks. So, if we do not like one, we just move to another. But there are much fewer banks in Canada, and this can be one of the most startling differences for newcomers.

While Americans have access to almost 5,000 different banks, Canadians have less than 100. But your choices are even more limited when you consider that five Canadian banks control close to 90% of the market there. These include:

  • Royal Bank of Canada (RBC)
  • Toronto-Dominion Bank (TD)
  • Bank of Nova Scotia (Scotiabank)
  • Bank of Montreal (BMO)
  • Canadian Imperial Bank of Commerce (CIBC)

On the positive side, these banks tend have lots of branches. So, the lack of choice should not limit your access to banking services.

Still, if you find the lack of choice unsettling, you do have alternatives. There are many excellent banking options in Canada. While some of these are services associated with brick-and-mortar banks, others are banks that are located only online. This means that they have no physical branches while still providing all the same services. They also can be significantly cheaper than traditional Canadian banks, and with most people now doing their banking almost exclusively online, they are something everyone there should consider.

Canada also has credit unions, though these, too, are far fewer in number than in America. Like with credit unions in the United States, this type of financial institution offers a number of key advantages over traditional banks.

2. Canadian Banks Are More Risk-Averse

Another important thing that you should understand about Canadian banks is that they tend to be more risk-averse than their American counterparts. There are a number of reasons for this. Less competition means that they do not need to be as aggressive in attaining customers. But the Canadian government also heavily regulates banks so that they do not take big risks. Because of this, Canadian banks have not experienced the kind of banking crises their American counterparts have, even during the Great Depression.

Being more risk-averse means that it can be more difficult getting a mortgage in Canada than in the United States. What’s more, you may have to make a larger down payment than you would in America and you may have to accept a shorter loan term.

3. Canadian Banks Charge Higher Fees

Americans have long been spoiled by fee-free checking accounts. But Canadians, on average, pay more than $200 in banking service fees every year. Some premium bank accounts can cost $30 or more just for monthly fees.

Though you can usually reduce (or even eliminate) these fees when you have a sufficient amount of money deposited or when you open multiple types of accounts. What’s more, students can often open free checking accounts, and, as stated previously, online-only banks in Canada are typically free as well.

These fees are further offset by the fact that, at least for the moment, Canadian banks pay considerably higher interest rates on bank accounts than U.S. ones.


You should not let the similarities between the United States and Canada mislead you into thinking that your banking experiences there will be the same as here. The differences are something that you need to prepare yourself for.

Categories: Finance