Jalal Nazari at Massey College in Toronto on Aug. 16.Tijana Martin/The Globe and Mail
Zamir Saar arrived in Canada from Ukraine last November and needed to set up a new bank account. But because he didn’t know how the banking system works and which bank offers the best credit products, he relied on YouTube videos and friends for tips in deciding the type of account or which bank to choose.
“I still can’t get my head around how the banking system here works,” Mr. Saar said. “I’ve asked my bank and some of my friends for a guide because you need this information to make many decisions, including financing a house or car.”
Mr. Saar is not alone. Newcomers to Canada often find it difficult navigating an unfamiliar banking system and understanding the myriad product options, and can get stuck when opening a new bank account, building credit and meeting a financial institution’s documentation requirements.
Following the end of provincial COVID-19 restrictions, Canada is seeing an influx of immigrants, with refugees from Afghanistan and Ukraine, along with international students and foreign workers, making up a significant portion of the newcomers.
A new Bank of Nova Scotia survey revealed that newcomers identified high rental costs, getting the right documentation and identification, signing up for a mobile phone and credit card, and finding employment as the common challenges they face shortly after arriving in Canada.
“Moving to a new country is such a big challenge and getting set up financially can be one of the significant things to do so that they can increase their likelihood of financial success,” said Tracy Gomes, senior-vice president of retail customer value at Scotiabank.
Ms. Gomes said newcomers often lack adequate knowledge of the financial system and are vulnerable to financial fraud.
Enoch Omololu, founder of Savvy New Canadians, a personal finance website, said newcomers are not approaching the right banks or asking the right questions on the best accounts.
“A good example is opening a credit card account that requires you to put down a deposit of $1,000 or more in order to have a secured credit card,” he said. “This may be a challenge because you can’t use the deposit until after two years.”
Jalal Nazari, an Afghan refugee, said resettlement agency Polycultural Immigrant and Community Services helped him open a new bank account and provided details on credit cards when he arrived in the country.
A month after opening the account, Mr. Jalal decided to get a credit card. A customer representative at the bank provided him with some financial information about different available options and suggested he switch to a student credit card, which offers more benefits.
Mr. Jalal noted that this would have been a difficult process because he had no idea which option or which bank was best.
Jalal Nazari is an Afghan refugee.Tijana Martin/The Globe and Mail
Mr. Omololu said instead of choosing online banking, newcomers can start with traditional banks because some of them provide customized offers, including accounts without monthly charges for one year. He said this will give them time to learn how the system works.
Ms. Gomes said Scotiabank supports organizations and non-profits that are helping newcomers, providing tools and resources needed to navigate the financial challenges they face and increase the opportunities they have for education, employment and adapting to a new environment and livelihood.
When Mr. Saar started searching for an apartment, landlords asked him to provide a credit history. Because he didn’t have a credit card, he was asked to pay six months’ rental deposit before he could secure an apartment.
The Scotiabank survey revealed that despite having financial savings to cover their spending on credit cards, the required documents and immigration status meant that newcomers were often limited to entry-level cards with minimal credit limits that were insufficient for initial expenses, especially for those arriving with a family.
The survey, which was based on in-depth interviews and focus group discussions, highlights newcomers’ need for financial literacy, knowledge of credit products and how to build credit, access to online banking, credit card options and fraud alertness as they start their life in Canada.
Ms. Gomes said her bank also provides tips to newcomers so they can protect themselves from being victims of fraud or phishing scams, explaining that fraudsters often disguise or pretend to be working for reputable organizations, banks or corporations as a way of stealing personal information to commit crime.
“There are some details their banks will never ask them to provide such as sending an e-mail with a link to click in order to access their accounts or products,” Ms. Gomes said. “We want them to know some of these things and this awareness helps them know this is not a common practice in the banking system and they should avoid it.”
Two weeks ago, Mr. Saar finally got a credit card and admits he is still learning the credit system and how to make transfers from his debit to credit account.
“One of my friends who has been living here has been able to explain to me some of these things,” he said. “Everyone needs these kinds of support to help them settle once they move to a new place.”
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