8 financial mistakes newcomers to Canada make—and how to avoid them

We moved to Canada in 2019 to give our daughter a different kind of life—one closer to our extended family and rooted in the stability my wife had known growing up in Ottawa. I was born in India, raised across the Middle East, and educated in the U.K. Our financial foundations came from very different worlds, and those differences became clear the moment we arrived.

Where I came from, you only bought what you could afford. Credit existed, but it wasn’t part of everyday life. In Canada, building credit is essential to everything from renting an apartment to buying a home. I had never filed a tax return until we immigrated, and when our first Canada Child Benefit cheque arrived months later, I thought it was a mistake.

In those early days, I was also trying to navigate the Canadian banking system and build a credit history. I applied for a credit card and was declined… despite having a generous credit limit back home.

These were just some of the early surprises. Like many newcomers to Canada, I made mistakes, adapted along the way, and learned by doing. If you’re new to the country, here are eight common financial missteps and some practical financial tips for immigrants on how to avoid them.

1. Choosing a bank without comparison shopping

A few days after arriving, I visited one of the major Canadian banks with my mother-in-law. The staff were polite and walked me through their newcomer offers, but the experience felt transactional. I was surprised to learn I’d be paying monthly fees for basic banking—something that felt foreign to me, having come from countries where banking was typically free and came with added perks.

The branch itself didn’t help—the environment felt sterile, and the branding didn’t instill much confidence. I ended up choosing a different Big Five bank that offered a more welcoming space and a smoother onboarding experience for newcomers.

Looking back, I wish I had explored more than just the traditional options. Canada has credit unions, digital-first banks, and fintech platforms that often offer better rates, lower fees, and more flexibility.

Tip: Don’t just choose the bank your friend or relative recommends. Do your own research. Use comparison tools to find the best bank for newcomers to Canada based on your actual needs.

2. Applying for credit cards without understanding credit checks

Spend a few minutes at a large Canadian retail store, and you’ve probably had someone approach you to sign up for a store-branded credit card. The offer sounds appealing: get a percentage off your purchase if you get approved. It’s tempting, especially when you’re just starting to build credit.

What many newcomers don’t realize is that credit card applications trigger a “hard inquiry” into your credit score, which can lower your score—especially when your credit history is still new. I learned this the hard way. After being rejected for one card and approved for another with a low limit, I later applied again through my bank, hoping for better terms. Each application left a mark on my file. I only understood the impact once I started tracking my credit more closely and saw how those early decisions could affect future borrowing.

Tip: Learn the difference between soft and hard credit checks. Avoid applying for multiple credit cards at once. If pre-qualification tools are available, use them to test your eligibility before applying.

3. Taking on car payments too early

Buying our first car in Canada was a major milestone. As our needs grew, we started thinking about trading up and eventually adding a second vehicle. We mentioned this to our financial advisor during a routine meeting, and they raised an important point.

They explained that even manageable car payments can reduce your mortgage borrowing capacity. The loans might be paid off well before the end of a mortgage term, but lenders still include them when calculating how much you can afford (and how much they’ll lend). That insight helped us rethink our priorities before making any new spending commitments.

Tip: Think long-term. Before taking on new car payments, consult a mortgage advisor to understand how auto financing can affect your mortgage eligibility in Canada.

4. Not filing taxes in your first year

It might seem logical to skip filing a tax return if you haven’t earned any income yet. But in Canada, even a zero-income tax return helps establish your residency in the system and unlocks benefits you may be eligible for—like the Canada Child Benefit or GST/HST credits.

Not filing means missing out on support that could make a real difference in your first few years. Plus, many of these benefits are calculated retroactively, so the sooner you file, the better.

Tip: File your taxes annually, even if you didn’t earn income that year. It’s easier than you think: use an online tax platform, a tax preparer or—if your situation is more complex—an accountant.

5. Delaying enrollment in employer RRSP matching

Registered retirement savings plans (RRSPs) are unfamiliar to many newcomers. You might also think it’s too early to open one—after all, you’re still settling in and figuring out how to make ends meet, and retirement feels far away. But if your employer offers RRSP matching and you decide not to participate, you’re leaving money on the table.

Even small contributions unlock “free” dollars from your employer, and those grow over time (and on a tax-deferred basis, too). RRSP contributions are also a smart way to lower your taxable income.

Tip: Start contributing to an RRSP early. RRSPs are one of the best tools for saving for retirement in Canada, especially when contributions are partially matched by your employer.

6. Not meeting with a financial advisor

Between TFSAs, RRSPs, RESPs, GICs, mutual funds, and ETFs, Canadian savings and investing options can look like alphabet soup. It’s no wonder many newcomers stick to basic banking for years without exploring the rest.

By not speaking with a financial advisor, however, you risk missing out on tailored advice that can help you reach your goals faster, whether that’s buying a home, saving for your child’s education, or building an emergency fund.

Tip: Book a meeting with a financial advisor (many banks offer this service for free). They’ll help you understand your options and create a plan based on your income, goals, and risk tolerance.

7. Not shopping around for insurance

I signed up for home and auto insurance through a broker a friend recommended. The experience was smooth, but a few years later, I discovered an online-only provider offering rates 40% lower for the same coverage.

It wasn’t personal. It was just business. I switched and told my friend, and they switched, too.

Tip: When it comes to choosing car insurance in Canada, don’t just rely on personal referrals. Use online comparison tools to shop around, and consider bundling your home and auto policies to save even more.

8. Overlooking tools like rate aggregators

Rate aggregators are websites that enable you to compare the features, prices and terms of several products or services—such as mortgages, bank accounts, insurance policies and credit cards—at once. Ratehub.ca is one example. (Ratehub.ca and MoneySense.ca are both owned by Ratehub Inc.)

A friend of mine recently used Ratehub.ca to compare mortgage rates and ended up with a much better deal than what their broker had initially offered. When they shared the rate, the broker went back and negotiated something even better.

Tip: Use rate aggregators and comparison sites to explore Canada’s top financial products. It could save you time, money, and a lot of second-guessing.

Final thoughts on learning personal finance in Canada

Every mistake I’ve shared here is one I’ve either made or come close to making. Starting over in a new country doesn’t just require courage—it requires new knowledge, new tools, and a willingness to ask questions.

If you’re new to Canada, don’t worry about getting everything perfect. Just keep learning, keep asking, and take it one smart step at a time.

Read more for newcomers:

• Earning, saving and spending money in Canada: A guide for new immigrants
• The best credit cards for newcomers to Canada
• How to create a CRA account
• Before you buy, here’s how to compare home insurance

About Vickram Agarwal

Vickram Agarwal is a multiple-time founder and award-winning entrepreneur. He leads S1:E2, a business strategy consulting firm, and contributes to The Globe and Mail, Entrepreneur Magazine, and Inc.

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