Canadians are often surprised by how different banking is in the U.S. versus back home. Understanding the differences, and how to manage them, can help make your time in the U.S. stress-free and enjoyable. Here is an overview of some of the primary differences you may come across when banking in the States.
Your U.S. debit card has more advantages. It can be used either with your signature or with your PIN, and it’s accepted worldwide. Because it’s a Visa‡ debit card, you can use it anywhere Visa is accepted—including at online retailers, to book hotels, buy airline tickets and more. But just like when you use your debit card in Canada, you must have funds in your account in order to make a purchase. It’s a Visa card, but it’s not a credit card.
Post-dated checks are processed when received in the U.S. Typically, post-dated checks are not accepted in the U.S., but if they are, the checks will be processed immediately. As soon as they clear, the amount is deducted from your account.
U.S. utility company bills must be paid in U.S. dollars.Unlike in Canada, they can’t be paid at any bank offices in the U.S. or via telephone banking or ATMs. It’s easiest to pay your U.S. bills using your U.S. checking account through RBC Bank’s Online Bill Pay.
U.S. bank account statements generally display two balances. The first, your available balance, is the amount of money in your account available for use. The second, your ledger balance, is calculated at the end of the day, and it includes deposits made by the bank cutoff time and checks that cleared. Your available balance may be lower than your ledger balance if some transactions, such as debit card transactions, haven’t yet posted. Also, some amounts will be reflected only when the entire transaction posts. Tips at restaurants, gas pump purchases, car rentals, and hotel deposits or reservations are examples.
If your overdraft protection line of credit has automatically advanced funds,you must make payments on the interest and principal in a separate transaction, by either calling your lender or transferring funds using Online Banking.
Debit card purchases are deducted from the available balance in your checking account. Your available balance may not include checks or debit card purchases that haven’t posted to your account. An overdraft line of credit can help prevent accidentally overdrawing your account and help you avoid the fees associated with an overdraft. Take note of the key difference here. Unlike in Canada, if funds from your personal line of credit have been automatically advanced to your checking account, you must make payments on the interest and principal in a separate transaction. You can repay the advance using Online Banking or by calling us. Or, you can set up an automatic draft as a recurring monthly payment.
In the U.S., transactions may take a few more days to post than you’re used to. Allow:
- 1-3 days for ATM or debit card transactions
- 5-7 days for bill payments processed by merchants
- Up to 5 days for a check
In the U.S. your deposits are insured by the Federal Deposit Insurance Corporation (FDIC)12.The FDIC guarantees the safety of a depositor’s accounts in U.S. member banks up to $250,000 USD per depositor for each deposit ownership category in each insured bank. In comparison, the CDIC insures Canadians’ deposits held at Canadian banks up to $100,000 CAN.
To close a checking account, you must contact the bank.In the U.S., bringing your account balance to zero does not automatically close your account. This leaves you open to incur monthly service fees that could overdraw your account. If you’re an RBC Bank client, call 1-800 ROYAL 5-3 (1-800-769-2553) to close your account.
FAQs
In Canada, banking is dominated by a few major banks, while the US has a more diverse banking sector with numerous large national and regional banks. These differences are reflected in various aspects, including regulations, services, and banking options available to consumers and businesses.
How different is the US central banking system from the Canadian? ›
One key differentiator is that while the U.S. system consists of thousands of mostly regional banks, Canada's national banking system is dominated by six very large institutions—Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal, Canadian Imperial Bank of Commerce, Bank of Nova Scotia, and National Bank of ...
How does the Bank of Canada function differently than the US Federal Reserve? ›
A formal difference between the Federal Reserve and the Bank of Canada is the Fed's “dual mandate” to promote the goals of maximum employment and stable prices. This is in contrast to the Bank of Canada's monetary policy framework: a target of 2 per cent inflation.
How is the banking system in Canada? ›
Canada has one of the most accessible banking systems in the world – more than 99 per cent of Canadian adults have an account with a financial institution. Number of banks offering financial products and services to Canadian consumers, including bank accounts, credit cards, loans and investments: 40.
What is the difference between the Bank of Canada and commercial banks? ›
The Bank of Canada is a union of all commercial banks in Canada, responsible for monetary policy. C . The Bank of Canada is the central bank, it sets objectives of monetary policy, and serves public with loans.
Are Canadian banks more secure than US banks? ›
Thankfully, experts say Canadian banks are significantly less vulnerable to failure than our neighbours' to the south, for many reasons, and your money in a Canadian bank will continue to be safe.
Why are Canadian banks better? ›
The concentrated nature of Canada's banks makes it easier for the Office of the Superintendent of Financial Institutions (OSFI), the industry's regulating body, to understand their operations and keep a close eye on what they're up to.
What is the difference between US and Canadian economic systems? ›
Unlike America, Canada is a resource economy: The U.S. imports resources, whereas Canada exports them. It has the second largest oil reserves in the world. People don't think of Canada like that.
Does Canada have a strong banking system? ›
Canada's financial system is one of the safest and strongest in the world. This is due in part to effective financial sector policy, regulation and supervision, liquidity support, deposit insurance, recovery and resolution strategies and consumer protection and financial education.
Why are Canadian banks safer than US banks? ›
When you look at Canada's banking regulations, you can see why that is the case. Canada regulates its banks very strictly and doesn't let many players enter the market. As a result, Canadian banks tend to be safer than U.S. banks.
Its operations include four principal functions: to manage the country's money supply; to act as the federal government's agent in issuing its bonds and managing its holdings of foreign currencies; to manage various monetary policies that can influence the performance of the economy, such as interest rates; and to ...
What are the 4 roles of the Bank of Canada? ›
Supporting this overarching objective, the Bank has four main responsibilities: monetary policy; promoting a safe, sound and efficient financial system1 within Canada and internationally; designing and issuing bank notes; and acting as fiscal agent and banker to the Government of Canada, including managing the public ...
Why is the Canadian banking system better than the US? ›
Moreover, in Canada, it is much easier to regulate banks and ensure compliance among a few key players. In other words, the chances of a "bad apple" are low. It's worth noting, too, that the banks' asset portfolios are highly diversified, unlike those of smaller U.S. regional banks such as SVB or FRB.
What are the challenges of the banking industry in Canada? ›
Canada's banking industry is coming through yet another challenging period. Capital requirements, evolving risks, regulatory changes, technological disruption and macroeconomic volatility continue to complicate Canadian banks' growth agendas as they navigate the early months of 2024.
Who controls the banking system in Canada? ›
The primary banking regulators in Canada are the Office of the Superintendent of Financial Institutions (OSFI), an independent agency that reports to the Minister of Finance (the Minister), and the Financial Consumer Agency of Canada (FCAC).
Can I use my U.S. Bank in Canada? ›
Yes, cards issued by U.S. Bank can be used in most foreign countries.
Which bank works in Canada and USA? ›
RBC, TD, CIBC, and BMO allow Canadians to open U.S.-based bank accounts with Canadian documents and without a Social Security Number (SSN). Having a U.S.-based account can make it easier to spend and save in the U.S., such as for travellers, snowbirds, investors, students, and those working in the U.S.
What are the benefits of having a U.S. Bank account in Canada? ›
- Deposit mobile checks. Anytime - no matter what side of the border you're on. See How.
- Pay U.S. bills on the go. No need to send wire transfers or bank drafts from Canada. Pay through Online Banking or set up ACH payments.
- Your money, FDIC insured. Deposits are insured by the FDIC up to $250,000.
