Living in Alberta

Ways to pay for purchases

Most businesses in Canada accept money, debit cards or credit cards to pay for items.

  • Cash (paper money and coins) is used most often for small purchases.
     
  • Debit cards and credit cards are usually used for more expensive purchases.
     
  • Businesses may or may not accept personal cheques as payment for goods.

Cash

Canadian currency consists of dollars ($) and cents (¢). There are 100 cents in one dollar.

The coins available in Canadian currency are:

  • Penny (1¢).
  • Nickel (5¢).
  • Dime (10¢).
  • Quarter (25¢).
  • One dollar coin or "loonie" ($1).
  • Two dollar coin or "toonie" ($2).

Bills (paper money) are in the following common denominations:

  • $5.
  • $10.
  • $20.
  • $50.
  • $100.

Debit cards

Debit cards are sometimes called bank cards or client cards. Debit cards are obtained from your financial institution (bank, credit union or Alberta Treasury Branch). They are small plastic cards that allow you to use automated banking machines (ABMs, also referred to as ATMs) to withdraw money from your account.

At ABMs operated by your financial institution, you also may be able to deposit money and conduct other account transactions (for example, pay utility bills). Frequently, there is a small service fee for using ABMs, with the fee taken from your account.

Where merchants accept direct debit payments, you also can use a debit card to make purchases. The cost of your purchase is withdrawn from your account and credited to the merchant's account.

Credit cards

Credit cards are small plastic cards that allow you to buy items which you would pay for later. Anyone can apply for a credit card free of charge. Financial institutions and merchants usually accept credit card applications from people who have a good credit rating (record of repaying borrowed funds).

Credit cards are convenient and may sometimes serve as identification, but they can cause problems if you buy more things than you can afford.

  • You must pay interest on any amount not paid by the due date specified on the credit card statement.
     
  • The interest charged on unpaid credit card debt usually is much higher than interest rates for other types of loans.
     
  • Some credit cards offer lower interest rates than others, so it is important to read the interest rate information before using a credit card.

Cheques

A personal cheque is a piece of paper that instructs a financial institution (bank, credit union or Alberta Treasury Branch) to take the amount of money that is written on your cheque out of your account and pay that amount to the person or organization you name on the cheque.

When you open an account at a financial institution, you will receive a book of blank cheques and a cheque register. To write a cheque, write the date, the name of the person or organization you are paying, the amount of money in numbers and words and your signature in the blanks provided.

There are three very important things to remember when writing cheques:

  • Record each cheque in the cheque register. This will help you keep track of how much money you have left in the account.
     
  • There must be enough money in your account to cover the total amount of all the cheques you write. If there is not, your financial institution will charge an NSF (not sufficient funds) fee.
     
  • It is illegal to intentionally write a cheque for more money than you have in an account: you could be charged with fraud.
     
  • Never sign a blank cheque without filling in the name of the person or organization you are paying and the amount. A blank, signed cheque could be used to steal money from your account. Never write a cheque payable to "Cash" unless you are at a financial institution because it could be cashed by anyone.
     
  • If you use a cheque to pay for a purchase, you probably will be asked to show two pieces of identification (for example, a credit card, driver's licence or other document with your picture and signature)

Date Updated: Nov 01, 2007
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