Although the Canadian financial system is one of the safest in the world, newcomers should exercise caution when using financial services to safeguard their money. High-interest rates and costly hidden fees may be associated with quick access to funds. To cover unforeseen or approaching expenses, use emergency money or low-interest loans.
Canada’s banking system, governed by the federal government, is regarded as one of the most secure and stable in the world. However, unauthorized financial services, including pawn shops, payday loan businesses, check cashing shops, and businesses that offer quick tax refunds can occasionally hurt immigrants and refugees in Canada. As a result, consumers risk losing their hard-earned money to these organizations’ exorbitant fees and high-interest rates.
Payday loans
They are short-term loans of 2-4 weeks offered by private lenders and check-cashing businesses against your subsequent paycheck. You are permitted to borrow up to 50% of your upcoming paycheck. Due to their hefty service fees and interest rates, payday loans are among the most expensive forms of borrowing money. If you don’t repay the loan on time, these go up much more. For instance, if you receive a paycheque for $1,000, you can borrow $500 from a payday loan business, but depending on the loan’s terms, you can end up spending double that amount or more in interest and other fees.
Alternatives to consider using funds from your savings or emergency fund or asking a family member or friend to lend you money. Additionally, your bank or credit union might be able to provide you with a loan.
Outlets for cashing checks
These businesses cash checks if you don’t have a bank account; they typically charge a service fee in addition to a portion of the cheque amount. For instance, they may add a $5 service fee and a 3% fee on a $1,000 check for a total of $35.
A basic bank account with the ability to deposit, withdraw, and write checks is an alternative to those businesses. With a bank account, checks can be cashed for free.
Pawn shops
What they do is lend money in return for priceless items like jewellery and technology. You get the item back if you pay back the loan. If not, the pawn business will keep your items and sell them to another customer. These companies impose steep interest and fee rates.
Look to alternative sources of funding, such as family, friends, emergency funds, and government subsidies, for the money you require. As a newcomer to Canada, learning more about these banking principles can assist you in making wise and secure financial decisions.
Services for rapid-refund taxes
They offer “immediate refunds,” but they are not tax refunds. These loans are highly pricey. They impose exorbitant fees for services, including preparation, electronic filing, check cashing, and loan charges. These costs could total be several hundred dollars. You immediately receive your money back, less the fees. The government then transfers your tax refund to the company that settles your debt.
Consider the alternative of setting up a direct deposit of your tax refund into your bank account. Use free nonprofit community tax clinics as a resource to help you get your return as quickly and affordably as you can.
You can find free tax clinics at Canada.ca.
My favourite fax-filling software are Wealthsimple Tax and Turbo Tax.