A bank account where you keep money for your daily or regular transactions. Pay bills, withdraw cash and pay for stuff with the funds in your chequing account.
Debit card (also called bank card):
A card that's connected directly to your bank account. Use your debit card to sign in to online and mobile banking, withdraw cash at ATMs, and pay for stuff in stores. You'll receive a debit card when you open a bank account.
An electronic payment that transfers money directly to your bank account, and can replace cash or cheques. Many Canadians get their paycheques through direct deposit. All you have to do is provide your bank account, institution and transit numbers.
An online service that lets you send money for free to an email address or mobile phone number. The recipient receives a link with instructions to deposit the money into their Canadian bank account. You can also receive and request money through e-Transfer.
An automatic payment or standing instruction to pay bills, fees and memberships from your bank account. Payments are taken out at a specified date or frequency. Setting up pre-authorized payments helps you organize your bills and pay them on time.
A bank account to save money and earn monthly interest for long-term goals and bigger purchases. You can deposit and withdraw money from a savings account at any time. You also pay tax on the interest that's earned.
Credit and borrowing
A fee you pay once a year to use certain credit card benefits, such as insurance and rewards. Some credit cards, such as the Simplii Cash Back Visa* Card, offer benefits without an annual fee.
A card with an approved credit limit that's used to pay for stuff online or in stores, and withdraw cash from CIBC and Visa* Plus ATMs. Make monthly payments based on how much you've spent, plus any interest or fees. Credit cards are used for daily spending, reservations or big expenses. When used wisely, your credit card can help you build your credit score in Canada.
The maximum amount you're approved to borrow on your credit card or line of credit. Banks and other lenders use your credit score, employment status and income to determine your credit limit.
Credit score (also called credit rating):
A measure that lets banks, lenders and other companies know if you can manage your debt. It's based on your previous behaviour, such as paying bills or making loan payments on time. Credit scores range between 300 and 900. A good credit score can get you better interest rates and credit limits when you borrow money.
An interest rate that's locked in for a certain period of time. The rate doesn't change over the length of the loan, line of credit or mortgage.
Line of credit:
An account with an approved credit limit and interest rate you borrow from for a certain period of time. Make monthly payments based on how much money you've borrowed, plus any interest. Lines of credit usually have lower interest rates than credit cards. They're useful for flexible or unexpected expenses, such as home renovations and repairs.
A lump sum amount you're approved to borrow and pay back with interest by a predetermined date. Loans are useful for bigger spending with fixed payments, such as buying a car or paying for school.
The lowest amount of money you must pay back by the due date on your statement or bill. Paying less than the minimum payment hurts your credit score.
A benchmark rate that's set by Canada's banks and used to determine the interest rate for variable-rate products, such as lines of credit and mortgages. The current Simplii prime rate is RDS%rate.treasury.Published(undefined,undefined,prime_rate,undefined-undefined-undefined-undefined-undefined)(#O2#)%.ⓘ
An interest rate that's tied to a benchmark rate or index. When this rate changes, it affects the interest rate and payments for variable-rate products, such as lines of credit, loans and mortgages. Simplii's variable rate is based on the prime rate.
The number of years it takes you to pay back your mortgage with interest in full. The maximum amortization is usually 25 years for insured mortgages and 30 years for uninsured mortgages.
Canada Mortgage and Housing Corporation (CMHC) Opens in a new window.:
The Canadian government’s housing authority. Here's where you'll find research on the Canadian housing market and advice for affordable housing. The CMHC also has information for mortgages that need to be insured.
The amount of money you put towards a property you want to buy. Banks or lenders will subtract your down payment from the property price to determine your mortgage principal.
A mortgage with a fixed interest rate over the entire term. With a fixed-rate mortgage, you make the same principal and interest payments. This mortgage is useful if you want to know the exact amount you'll pay each month.
A mortgage that has a principal greater than 80% of the property price. If you have a high-ratio mortgage, you must buy mortgage default insurance. The insurance will be added to your mortgage payments.
A home loan that's used to buy property, such as a house, condo or land.
A specific length of time you agree to pay a certain interest rate (variable or fixed) and follow the conditions of your mortgage. Terms are smaller periods within an amortization, and can range from 1 to 10 years.
A mortgage that's tied to a variable rate. Changes to the rate affect how your monthly payment is applied. If the rate goes down, more of your payment goes towards the mortgage. If it goes up, more of your payment goes towards the interest.
GIC (guaranteed investment certificate):
An investment that locks in a lump sum of money for a fixed term and interest rate. When the term is over, you'll get back your money in full, plus any interest you've earned. A GIC term can be 1 to 5 years.
RESP (registered education savings plan):
A savings plan for your child's post-secondary education, such as university or college. You don't pay tax on money you earn from interest or investing while it stays in the plan. The government can also add up to $500 annually to an RESP, for a lifetime maximum of $7,200.
RRSP (registered retirement savings plan):
A retirement savings plan that lets you earn interest and investment income without paying tax until you withdraw the money. When you contribute money to an RRSP, you can be eligible for a partial refund when you file your income tax return. Contribute to an RRSP until December of the year you turn 71.
TFSA (tax-free savings account):
A savings plan with annual contribution limits that lets you earn interest and investment income tax-free. You must be 18 years or older to open a TFSA. Find the current contribution limits at the Canada Revenue Agency (CRA) Opens in a new window..