Many Canadian university students open a student account to take advantage of lower fees and flexible account features. If you’re graduating soon, you may be wondering what happens to your student account when you leave university.
Banks often convert student accounts into traditional checking accounts after graduation, but you shouldn’t just take what they give you.
Your banking needs and priorities may change as you enter the next phase of your life – after graduation, it’s time to shop around.
Note for international students: According to ICEF Monitor, a market research firm for the education industry, Canada hosted over 1 million international students in 2023. Many international students use the Student Direct Stream (SDS) expedited visa program, where they acquire a GIC to finance their studies. Access to these GICs may have influenced your choice of bank. As your student status expires, you now have more freedom to bank wherever you want.
This is what happens to your student account after graduation
Fees will rise
Depending on which bank you are with, you may be charged new service fees on your bank account once your student status ends. Some financial institutions may offer a grace period of several months before fees are applied.
Your account type may change
Some banks will automatically convert your student account to a standard banking package unless you make specific changes. The new package may have requirements or restrictions that are unknown to you, or features that do not meet your needs.
Should you keep your student account?
Yes, provided the account features and the new fees meet your requirements.
Compare your existing account with other options at your current bank (and also competitors) to find the account that is best for you.
Switching to a normal checking account
Look for a checking account that supports your usual banking habits and makes it easier for you to manage your finances and achieve your goals. Here are some things to consider when shopping for a new account:
- Is online and/or app-based banking available? Canadians are increasingly moving toward digital banking solutions, so if that’s you, make sure any account you’re considering can be accessed virtually.
- Monthly fees: Do the fees seem reasonable for the account features included? Sometimes you can save money by paying a higher fee for more flexible features (like unlimited e-transfers). When making your decision, evaluate your typical account activity.
- Transaction limits: Make sure that any monthly transaction limits are manageable within the scope of your usual account usage.
- Minimum balance requirement: Some checking accounts don’t charge fees if you maintain a certain minimum balance. Consider taking advantage of this benefit.
- International money transfers: If you frequently transfer money to or from abroad, it is important to find an account that allows you to do this easily.
- Discounts and promotions: If you are open to switching banks, you may be able to get special rates or free gifts when opening a checking account at a new institution.
Nerd tip: If your checking account changes, your bank account number will change too. Don’t forget to update your direct deposit information with the CRA and any other organizations that may have it. You’ll also need to adjust any automatic bill payments that come out of your account, such as your phone or credit card bill, to make sure you don’t miss a payment.
Additional financial considerations after graduation
Whether you’re entering the workforce immediately after graduation or taking your time to plan your next move, it’s wise to review your financial situation after any major life change. Here are some considerations that will help you reach your financial goals.
- Evaluate your finances and create a budget. To achieve your financial goals, it’s important to live within your means. A monthly budget will help you see what you’re spending your money on and how much you have left over each month. You can use this information to achieve your goals, whether you’re looking to build your savings, pay off your student debt, or finance a big purchase.
- Upgrade or open a new credit card. If you build a solid credit history, you’ll have an easier time borrowing money in the future. Once you’ve built a credit history with a student credit card, you may be able to switch to another type of card with a higher spending limit or a better rewards program. For those who don’t yet have a credit card, it’s wise to start building a credit portfolio as you enter the workforce. In any case, be careful not to spend more than you earn.
- Saving for retirement. As you enter the workforce, it’s wise to save a portion of your income in a TFSA or RRSP account to fund your retirement. The earlier you start saving for your retirement goals, the less money you’ll have to put away each month. Even if it’s a small amount at first, every little bit counts. Use the Canadian government’s budget planner tool to determine how much you can save each month.
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