When I arrived from the UK on a two-year visa in 2019, I quickly ran into one of the less obvious hurdles: Canada’s credit system. Despite having a strong credit history at home, it didn’t carry over. I had to start from scratch.
That lack of credit history affects everything. Getting a basic credit card is challenging. Essentials like phone and internet, too, since they often require a credit check. And if an application is rejected, reapplying can ding your credit report a little more, making the next attempt even more difficult.
There are signs that this is starting to change, though. In 2023, Scotiabank became the first major Canadian bank to recognize overseas credit history, and others are gradually exploring similar approaches. More on that later.
A credit-obsessed country
One of the biggest early surprises was how central credit is to Canada’s financial system, and how strongly everyday banking nudges you toward it.
In the UK, it’s easy to live comfortably without ever relying on a credit card. Debit cards are widely accepted, transactions are typically unlimited, and even basic chequing accounts don’t usually come with minimum balance requirements. Cash withdrawals are also generally free at ATMs, even outside your own bank.
The experience is different in Canada. Many everyday chequing accounts come with monthly fees unless you maintain a minimum balance—often in the low thousands of dollars—and transaction limits are common.
When I arrived, I chose TD Canada Trust because of its branch and ATM network, which made day-to-day access easier. Even so, my chequing account came with a 25-transaction monthly limit, after which additional transactions were charged at $1.25 each. There was a $3,000 minimum balance requirement to avoid a monthly fee.
Cash or credit?
In my first couple of months in Canada, I tried to work around the 25-transaction limit by withdrawing larger amounts of cash—$200 at a time, for example—but that strategy quickly proved impractical. Many businesses were already cashless, which meant using my debit card for small purchases and “wasting” my limited monthly transactions on things like a $4 coffee.
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At the same time, I ran into situations where cash or debit simply weren’t accepted. Renting a car required a credit card. Even signing up for certain services, like classes at Second City, required one (at least in 2019).
It quickly became clear that in Canada, a credit card isn’t just convenient, it’s often essential.
A chicken-and-egg problem
For many newcomers, getting a first Canadian credit card can feel like a catch-22. You need credit history to qualify for a card, but you need a card to build that history.
As a temporary resident, I found the requirements especially difficult to meet. Banks often require recent Canadian pay stubs or proof of employment, which are hard to provide when you’ve only just arrived and are still looking for work. My visa allowed me to find a job after entering the country, but the banking system wasn’t designed around that reality.
There are a couple of ways around these strict requirements.
Secured credit cards
One of the most common ways around this hurdle is a secured credit card. These cards require you to deposit money into a linked account, which the bank can use as collateral if you fail to repay the balance.
In my case, I put down $1,000 to secure a card. It finally freed me from constantly worrying about transaction limits and made everyday life much easier—including renting a car so I could see more of the country I’d just moved to.
Most major Canadian banks offer secured credit cards, alongside providers like Neo Financial, Capital One, and Home Trust. Some secured cards offer rewards, but their main purpose is helping newcomers build credit.
