Financial Glossary.

The total time to pay off your mortgage in full. Standard is 25 years for insured mortgages, up to 30 years for uninsured. Longer amortization = lower payments but more total interest.

A yearly charge for holding a credit card. Premium cards charge $100–$800/yr but offer rewards and perks that often exceed the cost. No-fee cards exist but typically have lower earn rates.

The yearly interest rate charged on unpaid credit card balances. Purchase APRs in Canada typically range from 19.99% to 22.99%. Always pay your balance in full to avoid interest charges.

A person added to someone else's credit card account. They receive their own card and can make purchases, but the primary cardholder is responsible for payments.

Moving debt from one credit card to another, usually to take advantage of a lower promotional interest rate (often 0% for 6–12 months). A balance transfer fee of 1–3% usually applies.

The amount of income every Canadian can earn tax-free. Federal: ~$16,129 (2026). Provincial amounts vary. This creates a non-refundable tax credit at the lowest bracket rate.

Profit from selling an investment for more than you paid. In Canada, 50% of capital gains are included in taxable income (inclusion rate). The first $250K has a 50% inclusion rate; above that, 66.7% (2024+).

Using your credit card to withdraw cash from an ATM. Interest begins immediately (no grace period) at a higher rate than purchases, typically 22.99%. Avoid if possible.

The tax deduction for the depreciation of business assets (equipment, vehicles, buildings). Assets are grouped into classes with specific depreciation rates.

A private corporation controlled by Canadian residents. CCPCs qualify for the small business deduction (9% federal rate on first $500K of active business income) and other tax advantages.

A federal Crown corporation that insures eligible deposits at member institutions up to $100,000 per depositor, per insured category. Covers savings, chequing, GICs, and more.

A bank account for daily transactions — bill payments, debit purchases, direct deposits, and e-Transfers. May charge monthly fees that can often be waived with a minimum balance.

Security technology where your card's embedded chip is read by the terminal and you enter a PIN to authorize the transaction. Standard in Canada.

Mortgage default insurance required when your down payment is less than 20%. Premiums range from 2.8% to 4.0% of the mortgage amount, added to your balance. Provided by CMHC, Sagen, or Canada Guaranty.

Auto insurance covering damage to your vehicle from a collision, regardless of fault. Required if you have a car loan or lease.

Auto insurance covering non-collision damage: theft, fire, vandalism, weather, animal strikes. Optional but recommended for newer vehicles.

Tap-to-pay technology (NFC) allowing transactions under $250 without inserting your card or entering a PIN. Supported by Visa, Mastercard, and Amex.

Canada/Quebec Pension Plan premiums deducted from employment income. 2026 rates: CPP 5.95%, QPP 6.4% on pensionable earnings up to $73,200. Builds retirement pension benefits.

The federal agency responsible for tax collection, benefit payments (CCB, GST/HST credit, OAS), and TFSA/RRSP administration. File your tax return even if you have no income.

The maximum amount you can charge to your credit card. Keeping your balance below 30% of your limit (utilization ratio) helps maintain a good credit score.

A three-digit number (300–900) representing your creditworthiness. Calculated by Equifax and TransUnion based on payment history, utilization, credit age, mix, and inquiries.

The percentage of your available credit that you're using. Keeping utilization below 30% is important for your credit score. Below 10% is ideal.

The amount you pay out of pocket before insurance coverage kicks in. Higher deductible = lower premium. Choose based on what you can afford in a claim.

An electronic transfer of funds directly into your bank account, commonly used for payroll, government benefits (CRA refunds, CCB, OAS), and pension payments.

A distribution of a company's earnings to shareholders. Eligible Canadian dividends receive preferential tax treatment through the dividend tax credit.

Investing a fixed amount at regular intervals regardless of market conditions. Reduces the impact of volatility and removes the temptation to time the market.

The upfront cash payment when buying a home. Minimum is 5% for homes up to $500K, 10% on the portion $500K–$1.5M, and 20% for homes over $1.5M.

Your total tax paid divided by your total income. Always lower than your marginal rate because lower brackets are taxed at lower rates. A better measure of your actual tax burden.

An Ontario payroll tax on employers with payroll over $490,000. Rate is 1.95% of total Ontario payroll. Small businesses with payroll under $5M get an exemption.

A Canadian digital bank known for offering some of the highest savings and GIC rates in Canada, with no monthly fees. Operates as the digital arm of Equitable Bank.

One of Canada's two major credit bureaus. Maintains credit files and calculates credit scores for Canadian consumers. Free score available through Borrowell.

An investment fund traded on stock exchanges that holds a basket of stocks, bonds, or other assets. Low-cost index ETFs (VGRO, XEQT, VBAL) are popular in Canada.

A registered account for first-time home buyers. Contributions are tax-deductible (like RRSP) and withdrawals for a qualifying home are tax-free (like TFSA). $8,000/year, $40,000 lifetime.

A mortgage with an interest rate that stays the same for the entire term. Provides payment certainty but may cost more than variable over time.

A fee (typically 2.5%) charged on purchases made in a foreign currency. Some cards waive this fee entirely (Scotiabank Passport, Brim, Home Trust Preferred).

Gross Debt Service (GDS, max 39%) and Total Debt Service (TDS, max 44%) ratios used by lenders to determine how much you can borrow. GDS includes housing costs; TDS adds all debts.

A deposit that pays a guaranteed interest rate for a fixed term (30 days to 5 years). Principal is guaranteed and CDIC insured. Cannot be withdrawn early without penalty.

The time between your statement date and payment due date (usually 21 days) during which no interest is charged on new purchases, as long as you pay your balance in full.

Goods and Services Tax (5% federal) / Harmonized Sales Tax (13–15% in HST provinces). Quebec charges GST + QST (9.975%). BC, SK, MB charge GST + PST.

A credit check triggered when you apply for credit (loan, credit card, mortgage). May lower your score by a few points. Multiple inquiries within 14 days for the same type of loan count as one.

A savings account offering above-average interest rates, typically from online banks like EQ Bank, Tangerine, or Wealthsimple. Rates range from 3% to 5%.

A Quebec employer payroll tax ranging from 1.65% to 2.6% of total payroll, depending on the size of the payroll. Funds Quebec's public health care system.

Creating a separate legal entity (corporation) for your business. Provides limited liability, tax deferral opportunities, income splitting, and access to the $1.25M LCGE.

A credit that businesses registered for GST/HST can claim to recover the GST/HST paid on business purchases and expenses. Reduces the net amount remitted to CRA.

A Canadian electronic funds transfer service that allows sending and receiving money instantly using email or phone number. Most banks include free e-Transfers with chequing accounts.

A mortgage penalty calculation based on the difference between your contract rate and the lender's current rate for the remaining term, multiplied by your balance.

A provincial/municipal tax paid when purchasing real estate. Rates and rebates vary by province. Ontario and BC have the highest rates; Alberta and Saskatchewan have none.

A tax exemption of $1.25 million (2026) on capital gains from selling qualified small business corporation shares. Only available through a CCPC.

Insurance that covers damages you cause to others (bodily injury, property damage). Minimum varies by province; $2M is commonly recommended for auto and home.

The tax rate applied to your next dollar of income. Canada uses a progressive system where higher income is taxed at higher rates. Combined federal+provincial rates range from ~20% to ~54%.

The annual fee charged by an investment fund, expressed as a percentage of assets. Index ETFs: ~0.2%. Mutual funds: ~1.5–2.5%. Lower MER = more money in your pocket.

The smallest amount you must pay each month to keep your account in good standing. Usually 2–3% of the balance or $10, whichever is greater. Paying only the minimum results in significant interest charges.

The fee charged for breaking your mortgage contract early. Fixed-rate: greater of 3 months' interest or IRD. Variable-rate: usually 3 months' interest.

The ability to transfer your existing mortgage (rate and terms) to a new property when you move. Not all lenders offer this; check before signing.

The length of your mortgage contract (typically 1–5 years), after which you renew at current rates. Not to be confused with amortization period.

Special bank account packages for new residents with waived fees (usually 1 year), no-credit-history credit cards, and dedicated newcomer support. Offered by all major banks.

CRA's response after processing your tax return. Shows your assessed income, tax payable/refund, RRSP deduction limit, and any adjustments.

A fee charged when a payment or withdrawal is attempted but your account doesn't have enough funds. NSF fees in Canada range from $25 to $48.

A service that covers transactions when your account balance is insufficient. Charges daily or monthly fees and interest on the borrowed amount.

The most important factor in your credit score (35%). Tracks whether you pay bills on time. Even one missed payment can significantly impact your score.

Credits earned on purchases that can be redeemed for travel, merchandise, gift cards, or statement credits. The value per point varies by program (Aeroplan ~2¢, PC Optimum ~0.1¢).

A card confirming your status as a permanent resident of Canada. Required for re-entry after international travel. Valid for 5 years.

A lender's conditional commitment to lend you a specific amount at a guaranteed rate (usually valid 90–120 days). Shows sellers you're a serious buyer.

The amount you pay (monthly or annually) for insurance coverage. Premiums vary based on risk factors, coverage amount, deductible, and province.

The amount you can pay toward your mortgage principal beyond regular payments without penalty. Typically 10–20% of the original balance per year.

Replacement cost pays to replace damaged items with new ones. Actual cash value deducts depreciation. Replacement cost coverage costs more but provides better protection.

A savings plan for a child's post-secondary education. Government adds 20% via CESG (up to $500/year). Lifetime limit: $50,000 per beneficiary.

An automated investment service that builds and manages a diversified portfolio for you. Wealthsimple Invest (0.4–0.5%), Questwealth, CI Direct Investing are popular in Canada.

A tax-deferred retirement account. Contributions reduce your taxable income. Withdrawals in retirement are taxed as income. 2026 limit: 18% of earned income, max $31,560.

Contributions to your RRSP reduce your taxable income dollar-for-dollar, up to your contribution limit (18% of prior year income, max $31,560). One of the most powerful tax planning tools.

The two main ways to extract money from a corporation. Salary is tax-deductible for the corp and creates RRSP room. Dividends avoid payroll taxes but don't create RRSP room.

A deposit account that earns interest on your balance. High-interest savings accounts (HISAs) from online banks offer the best rates (3–5%). CDIC insured up to $100,000.

A credit card backed by a cash deposit (typically $200–$500) that serves as your credit limit. Ideal for building or rebuilding credit history.

A 9-digit number required to work in Canada, file taxes, and access government programs. Apply at a Service Canada office with your immigration documents.

A tax reduction that lowers the federal corporate tax rate from 15% to 9% on the first $500,000 of active business income for CCPCs. Provincial SBD rates vary.

A credit check that doesn't affect your score. Includes checking your own score, pre-approval offers, and employer background checks.

An unincorporated business owned by one person. Business income is reported on your personal tax return. Simple to set up but offers no liability protection.

A federal tax incentive program that provides tax credits for R&D activities in Canada. CCPCs can receive up to 35% refundable credit on qualifying expenditures.

OSFI regulation requiring borrowers to qualify at the higher of their contract rate + 2% or the qualifying rate (5.25%). Applies to all mortgages since 2018.

An information slip issued by employers showing employment income, deductions (CPP, EI, tax), and benefits for the tax year. Must be filed with your tax return.

Life insurance for a specific period (10, 20, or 30 years). Pays a death benefit if you die during the term. Affordable and straightforward — best for most families.

A registered account where investment growth and withdrawals are completely tax-free. 2026 contribution limit: $7,000/year. Cumulative limit: $102,000 (if 18+ since 2009).

One of Canada's two major credit bureaus. Maintains credit files and calculates credit scores. Free score available through Credit Karma Canada.

A mortgage with a rate that fluctuates with the Bank of Canada's overnight rate. Historically cheaper than fixed, but payments can increase if rates rise.

A one-time points or cash reward for new cardholders who meet a minimum spending requirement within the first few months. Can be worth $200–$2,000+.

Permanent life insurance that covers your entire life and includes a cash value component that grows over time. More expensive than term but provides lifelong coverage.