Canadian Payment System

The national currency of Canada is the Canadian dollar. Paper money is called “bills”. They are represented in the following denominations: $5, $10, $20, $50, $100, $1,000. Payments in foreign currencies are not accepted in Canada, except for those institutions that are eligible for exchange. There isa lot of such establishments (restaurants and shops) in the settlements along the U.S. border. Cash is convenient in stores, buying tickets, paying utility, etc. But if you decide to buy a car, then you’ll have to issue a certified cheque or a money order.

Cash is accepted almost everywhere in Canada, although you will frequently encounter with the refusal to accept it. Master Card, Visa and American Express credit cards are widely used in the country.

Debit cards of the bank where you have an account as well as personal and corporate checks are also a common thing among people. Certified cheques and money orders are becoming more and more popular.

Some trade organizations issue their own credit cards. They allow to make purchases on credit in the organization that issued these cards. As a rule, all the major supermarkets like “Bay”, “Sears”, “Break’s”, “Future Shop ” have such cards.

An overwhelming majority of Canadians prefer to pay by credit or debit cards. Credit cards are issued by banks that have an agreement with MaterCard or Visa. American Express issues its own cards.

It is not so easy to get a credit card for newcomers since banks first want make sure that you have got a job and have a regular income. Additionally, most banks require you to make a security deposit (or the premium), sometimes exceeding in 2-3 times a provided credit limit on your credit card.

Usually you can get a credit card not earlier than half a year or even a whole year after you arrived in Canada. Although it is not the strict rule at all. There real cases are known that some people managed to get credit cards during the first 2-3 months. This is largely determined by the department manager’s mood at the moment. You have to be an enourmously lucky man to appear in the right time at the bank office where a clerk will give you a credit card without any substantial problems.

Credit cards have certain limits. The limit is the amount you dispose to make purchases on credit. Typically, at the very beginning the limit doesn’t exceed one or two thousand dollars. Only after a considerable period of time (at least half a year), you can apply to increase the limit. Limit directly depends upon your annual income.

Credit cards are divided into three main types: Classic, Gold and Platinum.

Gold and Platinum cards have a greater limit (up to 5000 dollars) and provide additional financial benefits to the holder. For example, a medical insurance of the owner when travelling abroad the Canada. It’s a very useful thing for those who often travel to the United States. A person with a good regular income can get such a card. Consequently, owning of gold or platinum credit card is a good recommendation.

In order to get a credit card, you should contact your bank and ask about the possibility of receiving it. You will be given an application form to fill in and explained what to do after.

After you open a bank account, you will receive debit cards. Externally they look like the ordinary plastic credit cards. You can use them paying for purchases in many places – in large grocery stores, shopping centers or various service organizations. Debit cards differ from the credit ones. With the credit card you can buy having no money on your account. You can pay for your purchases later, after you have the money. Using a debit card for payments you transfer money from your account immediately, at the time of payment. If you have no money on the account, you will not be able to make the payment. Sometimes debit cards are called an “electronic wallet”. Debit cards also make it possible to withdraw cash. Use the Interac ATM system for withdrawal. ATMs are located in all banks and shopping centers. They are available for 24 hours. A PIN code is issued for withdrawal purposes which you must enter into the ATM machine to authorize your credit card.

After opening a bank account you will be given a checkbook. Issuing a check, you give an order to the bank to transfer money from your account to the check bearer account.

Checks are usually an instruent of payment to the organizations with whom you have established long-term relationships. Yes, accomodation rent or government fees are paid through checks. Wages is paid by checks, and companies pay for the services received from you in a similar way.

It should be noted that the checks from individuals are not accepted willingly by other individuals and trade organizations. The reason is simple – the check does not guarantee a payment. The person issuing a check may not have enough money on the account. In this case, the check will be returned by the bank and you will not receive a payment. Don’t issue checks if you do not have the required amount on your account because the bank penalty for each registered case is $25. Each bank establishes its own penalty rate.

The issue of post-dated checks (checks with deferred payment) is widely practiced in Canada. For example, if you render services to anyone, you may be written a check. You can get the money only after a certain period of time. A check may be revoked or canceled during this period.

Due to the fact that the usual checks do not guarantee a receipt of payment, many organizations require certified bank checks as a payment document or bank payment documents (money order or bank draft). Such securities are issued by the bank, and it costs from 2 to 5 dollars to receive them. The amount to be paid according to the documents is frozen on your account. If you change your mind, you can always return a payment document to the bank, and the frozen amount on your account will be unlocked.

Typically, certified check or money order is demanded in car dealer offices when buying a car, in stores when purchasing expensive appliances and in companies selling computers.


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