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Everyday Banking Distinctions

  Differences Between the U.S. and Canada You Need to Know

Whenever you are traveling or working abroad, easy access to your money is essential.  Whether you are a seasonal U.S. visitor, a student, or a professional living and/or working in the States, there are distinct  differences in U.S. banking.  Knowing these differences in advance will help you to more easily prepare for having ready access to your funds when you need them most.

To help make your time in the U.S. a stress-free experience, there are a few differences you need to be aware of so that you can more easily manage your banking needs while in the U.S.  Below, we’ll highlight the most important differences and tell you how to manage them.

Post-dated checks are processed when received in the U.S.

If a post-dated check is deposited earlier than you had intended, the check will clear and the amount will be deducted from your account at that time

Utility bills cannot be paid through banking offices, telephone banking or ATMs.

Utility bills can be paid via check, credit or debit card, or through online bill pay services directly to the utility company.  It is also important to know that you must pay these bills in U.S. dollars, and that means having a U.S. checking account, debit card or credit card.

U.S. bank accounts generally display two balances:

  1. Available balance:  This balance reflects the amount of money in your account available for use.  Debit card transactions that haven’t posted may reduce your available balance, but many times not for the exact amount.  Tips at restaurants, gas pump purchases, car rentals and hotel deposits or reservations are typically not accurately reflected until the entire transaction has posted to your account.
  2. Ledger balance:  This balance is calculated at the end of each business day.  Deposits made prior to bank designated cut-off times, as well as checks clearing, are included in this balance. The available balance may be lower than your ledger balance due to transactions that may not have cleared.

Overdraft protection lines are not automatically repaid.

While an overdraft protection line will automatically advance funds to cover overdrafts in the U.S. (typically in $100 increments), you must call or use online banking to pay back the principal and interest in full.

Debit cards purchases may cause you to overdraw your account.

This can occur due to an overstated available balance based on checks or transaction holds that haven’t cleared.  An overdraft line of credit can help to prevent this.

The available balance reflects the amount of money in your account actually available for use. The available balance may be lower than your ledger balance as check items in your deposit may not have cleared. Debit card transactions that haven't cleared yet will reduce your available balance but many times not for the exact amount. Tips at restaurants, gas pump purchases, and hotel deposits or reservations are typically not accurately reflected until the entire transaction clears.

In the U.S., transactions may take a few more days than you are used to before they are posted to your account.

Here is what you can expect:

  • 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).

The FDIC provides deposit insurance guaranteeing the safety of a depositor's accounts in U.S. member banks up to $250,000 per depositor for each deposit ownership category in each insured bank. U.S. member banks display: Member FDIC. The CDIC insures Canadians' deposits held at Canadian banks (and other member institutions) up to $100,000 CAN in case of a bank failure. CDIC automatically insures many types of savings against the failure of a financial institution. However, the bank must be a CDIC member and not all savings are insured.

To close a checking account, you must contact the bank.

Bringing your account balance to zero will not automatically close your account.  Your account will remain open and could continue to incur monthly service fees that could overdraw your account.

Most U.S. Debit cards don’t have “chip” technology yet.

When making purchases with your U.S. Debit card, “chip” technology isn’t widely used just yet in the U.S.  In most instances today, you will need to swipe your card through a card reader.  “Chip” technology is on the horizon, however, and should begin to be adopted more so in the coming two years.  In the meantime, be prepared to swipe your card through a card reader when making most transactions.

U.S. Debit cards can be used with a PIN or a Signature.

Debit cards can be used to make purchases using either a PIN or a signature for authentication. When paying for purchases, pressing CREDIT on the merchant terminal allows you to sign for your transaction and pressing DEBIT requires you to enter your PIN.

At some merchants, however, terminals require you to swipe your card without being able to select CREDIT or DEBIT, and simply prompt you for your PIN. In such cases, if you wish to sign for your purchases, either press CANCEL to be able to sign or tell the cashier you wish to sign for your transaction. Remember, if you would like cashback with your purchase, you have to use your PIN.

Fuel purchases

If you have a Canadian address and use your debit card at a gas station, we recommend that you either pay inside (not at the pump) or select “Debit” and use your PIN. For a signature transaction, the terminal at the pump will require you to enter the ZIP code associated with the billing address on the card. Non-U.S. ZIP codes will cause the transaction to reject.

When you see the Visa logo that merchant accepts Visa debit cards OR Visa credit cards.

In Canada, virtually all domestic debit card transactions are processed over the Interac network, though several financial institutions have also permitted PIN-based ATM transactions internationally over the Visa-owned Plus network. Some of the major banks’ debit cards, also support transactions on the NYCE network in the U.S. Visa is a large network in the U.S. and if your debit card has the Visa logo, it will be accepted in addition to a Visa credit card for payment of purchases at all merchant types – physical stores, online or mail & telephone order.

In addition, most debit cards issued in the U.S. also run on a regional network like NYCE, for example, that will enable you to use your card with a PIN.

There are thousands of Banks in the U.S. but only a few can satisfy the needs of Canadians in the U.S.

Throughout Canada there are a limited number of Banks and credit unions.  In the U.S. there are thousands.  Do your research. Not all U.S. banks can deal with the unique cross-border banking needs for Canadians travelling to or living in the U.S.

Understanding these key differences between U.S. and Canadian banking can help you to more easily prepare for your upcoming travels or extended stay.  Having this knowledge beforehand can help to put your mind at ease and ensure that banking while in the U.S. is a stress-free experience.