The Best Banks for Premeds - Rewards, Perks and More!

How to Choose the Right Bank for You

There are five major banks in Canada:

• Scotiabank
• Royal Bank of Canada (RBC)
• CIBC
• TD Bank
• Bank of Montreal (BMO)

Each of them has created financial packages aimed at students like you who want to become doctors, lawyers, dentists or any other professional occupation. Some even have products for residents and practicing physicians as well, so they have a lot of different things to offer anyone in the medical community.

But you should know that taking out a line of credit with a bank is not your only, or first, option. If you are not the most financially literate person (and not everyone is in their twenties!), you will need help in understanding the best options for you.

Want to know the real cost of attending medical school? Watch this video:

You should speak with your parents or the financial advisors at the bank to help you get a clear picture of what getting a line of credit, loan or credit cards entails. But whichever bank you choose, don’t make the choice based on things like how much money you can save, which is the best “deal” and the cheapest option. There is no such thing as a “cheap” option, when choosing from among the best banks for premeds.

So, your choice should come down to things such as:

• Interest rates (the cost of borrowing money)
• Line of credit limits
• Optional payment plans
• Perks and rewards (points for travel, spending; sign-up bonuses, etc.)
• Grace periods (amount of time you are not required to make payments, usually after graduation or residency)
• Loan and payment period extensions

We know that all this can seem overwhelming (trust us, we had to figure it all out too!). But think of it as another learning opportunity. Becoming a financial literate adult is one more skill that you can add to your medical school personal statements or medical school secondary essays as something that you did to prepare for medical school, and life, in general.

How to Reduce Medical School Debt

Remember that if you are approved for a line of credit (LOC), loan or credit card to finance your medical school education, you do not have to spend it all. The maximum amount of money that banks loan to medical students in Canada can top out at $350,000, which is a lot of money for a young person. However, we talked about the average medical school debt in the introduction, which is far lower than $350,000, meaning, a combination of financial literacy, careful budgeting and watching your spending habits can help you save hundreds of thousands of dollars in debt.

The Best Banks for Premeds

Again, this is a personal choice, but one thing we want to emphasize, is that you should not make this decision alone. It is stressful enough preparing for medical school academically – choosing the best extracurriculars for medical school, figuring out how to ask to shadow a doctor, and when to start studying for the MCAT - that you should not have to do the same with your finances.

Speak and consult with as many people as you can from your parents, relatives and bank managers to current med students or even graduates to help you make an informed decision. All these people can help you sort through all the differences between the amounts available, payment plans and interest rates offered by each of these banks.

One thing we can tell you, though, is that each of these banks has tried to sweeten their offers by including things such as credit cards with point systems (travel rewards, access to VIP lounges in airports), cashback bonuses, and even things like free Air Pods.

All these things are great, but try to think about the long-term as well. Student debt is a pressing issue in both Canada and the US, so try to make a decision on which bank will help you the most when it comes time to pay back the money, and not one that only offers short-term rewards.

After, we’ll mention some public options that could be a better fit to finance your education, if you are not convinced or willing to take on that amount of debt from a private institution.

The following list is a breakdown of all the financial packages the five major best banks for premeds in Canada offer.

1. Scotiabank Health +

Products Available:

Scotia Professional Student Plan Line of Credit

• Maximum Credit Limit: $350K
• Interest Rate: 0.25% (Prime Rate)
• Length of Grace Period: 2 years after graduation; 2 years after residency 

Eligibility Requirements

• Canadian citizen or permanent resident
• Good credit score

This plan is officially endorsed by many professional schools around Canada (although it is not the only bank with university approval) including the University of Toronto. It is geared to all professional students, including law students, and does not exclusively handle medical students, but it does have some perks that may appeal to you. The plan includes a no-fee chequing account with $1000 worth of overdraft protection and unlimited transactions.

If you have are approved for the line of credit, you will also be pre-approved for two credit cards, a Visa or American Express, with a credit limit of $10,000. But the interest rate on your credit cards is higher (20.99%) than your line of credit, which is set at the Prime Rate, or the interest rate set by the Bank of Canada, 0,25%, which is important to remember.

If you need to use either, it’s best to borrow money from the line of credit for everyday expenses. If you use your credit card instead, you will be charged more interest if you don’t pay back the full balance every month.

When it comes to repayment terms, Scotiabank gives you some leeway. It offers a grace period of two years after graduation and residency, where you do not have to make any payments, even though you will still be charged interest.

This is good because even though students try to pick medical schools with the best match rates, you may not always be matched through the CaRMS and have to reapply, meaning you are not earning any income yet. If you are not matched the first time, then you still don’t' have to make any monthly payments. You can choose to pay that interest, but any interest payments you don’t make will be automatically added to the principle (the money you have spent and now owe the bank).

2. RBC Healthcare

Products Available:

RBC Royal Credit Line for Medical and Dental Students

• Maximum credit limit: $350K
• Interest Rate: 0.25% (Prime Rate)
• Length of Grace Period: 2 years after graduation; 2 years after residency

Eligibility Requirements

• Canadian citizen or permanent resident status
• Official document proving your enrollment in a medical or dental school (letter of acceptance; receipt of a medical school tuition payment)
• A budget estimate for your time in medical school

The RBC plan comes with a lot of bells and whistles ($500 sign-up bonus; free iPad), but it also has more eligibility requirements than most plans. It also gives you a no-fee chequing account when you sign-up and the possibility to add credit cards to your financial products. You can get an RBC Avion card with travel rewards, but travelling is not something you think about when you’re in medical school.

Some Free Financial Advice...

The banks make it seem like it is easy to get these things, but remember that because you technically have the money to spend or go on vacations, it does not mean that you should. Many medical schools find that when students apply for institutional medical school scholarships and have to submit financial information, they are loaded with debt not related to their studies or living expenses, but rather unnecessary purchases of cars and vacations.

You will have to pay back that money eventually and the more you spend, the higher your monthly balance, the more you will be charged interest, accumulating more debt. One useful aspect of taking out lines of credit with a bank are the financial advisors that can help you make smart decisions about your money.

RBC does it, and so do all the other banks, so it is not a feature unique only to one bank. You should make regular consultations with these professionals as part of your financial education, so you can learn to avoid any pitfalls.

Back to the List...

3. CIBC Healthcare Banking

Products Available:

CIBC Medical, Dental and Optometry Student Banking Bundle

• Maximum credit limit: $350K
• Interest Rate: 0.25% (Prime Rate)
• Length of Grace Period: 2 years after graduation; 2 years after residency

Eligibility Requirements

• Canadian citizen or permanent resident status
• Officially enrolled in a medical school in Canada, dental school or optometry program

Similar to the other options on this list, CIBC offers you a $350K credit limit, a no-fee bank account, and gives you access to a few credit cards attached to rewards programs. However, one thing you might not like is that the plan only gives you access to $100K of the total credit available.

This should not a problem, though, since even though you have access to this amount, you should also explore funding opportunities through scholarships, and bursaries, which you generally do not have to repay, and even publicly-funded student loans to make up for any shortfalls to not rely solely on this line of credit.

CIBC also offers you a 2-year grace period after graduation and residency, which is standard across all five of the banks. One unique feature of this line of credit is that you can convert the student loan, into a medical residency loan, which will add another $15,000 to your credit limit, while also giving you more flexibility in financing options.

4. BMO Harris

Products Available:

Medical or Dental Student Line of Credit

• Maximum credit limit: $350K
• Interest Rate: 0.25% (Prime Rate)
• Length of Grace Period: 2 years after graduation; 2 years after residency

Eligibility Requirements

• Canadian citizen or permanent resident status
• Officially enrolled in a medical school or dental school in Canada

BMO Harris only gives you $95K of the total credit limit of $350K in the first year, which some see as a negative. But, let’s use an imaginary scenario to prove why it’s a good thing.

According to the Canadian Medical Education Statistics group, the average medical school tuition in Canada for a citizen or permanent resident is $16,798, which is fully covered by the $95K and then some. Let’s add even more.

$16,798 + $19,200 (living expenses for one year) = $35,998

The living expenses amount is based on the estimate calculated by the University of Alberta Faculty of Medicine and Dentistry. Even we round up to an even $20,000 in living expenses, the initial 95K from BMO Harris is more than enough, especially when you can also apply for Canada or Alberta Student Loans, which give you a maximum of $25,500 for one year. But, anyways, you will need to bring some documents and financial information to BMO to apply for the loan, such as your ID, proof of enrollment, and an estimated budget for your time in medical school.

5. TD Bank

Products Available:

TD Student Line of Credit

• Maximum credit limit: $325K
• Interest Rate: 0.25% (Prime Rate)
• Length of Grace Period: 2 years after graduation; 2 years after residency

Eligibility Requirements

• Canadian citizen or permanent resident status
• Officially enrolled in medical or dental school (undergraduates and graduates can also apply for this LOC, but they have reduced credit limits)

You only have a $325K available to you as a maximum, but the first year you only get access to $100K, which should be enough to cover at least your first year of medical school. TD also give you a two-year grace period where you are not obligated to make payments, but you will still accrue interest on your loan, and the amount can vary depending on whether interest rates go up, which is a possibility you should anticipate.

Talking about interest rates, it’s this that makes borrowing from a private lender so complicated. And it’s a perfect segue to talk about the benefits of taking out a Canada Student Loan or provincial student loan rather than taking out a line of credit from the best banks for premeds.

Should I Get a Private or Public Loan?

If you’re a resident Canadian student or a permanent resident, you are eligible for loans from both the federal and provincial government whatever province you live in (students from Nunavut, the Northwest Territories and Quebec have their own student loan systems).

All these private lenders make a lot of noise about their “low” interest rates, and have two-year grace periods, but what happens when those two years are up?

Depending on how much you’ve borrowed, after those two years are up, you will be charged even more interest if you don’t make your monthly repayments. What’s more, if anything happens during medical school that makes you drop out or leave, your line of credit will become a personal line of credit, meaning you won’t have the same repayment options or interest rates, depending on the bank you used.

To be sure, some banks may renegotiate repayment plans with some of their clients, but that is not always the case. This is where the value of taking out a public loan is clear, since the Canadian government has recently eliminated the accumulation of interest on all student loans from now on. So, yes, if you are about to enter medical school, you should first think about public loans, which will not accumulate any interest, ever, while also giving you flexible repayment options that can lead to low or even zero monthly payments for a period of six months depending on your income.

Even better, the grace period for repaying a Canada Student Loan lasts until you start making over $25,000 a year, which is more accommodating to graduates who may wait years to find employment.

Still, the one good thing (if you want to think of it that way) is that a private lender will loan you a lot more money. The amounts for Canada Student Loans depend on where you live in Canada, as each province has its own lending criteria, but they usually top out between $20,000 and $50,000 per year. But, if there’s one thing to take away from this article, it’s that you should only borrow what you really need to pay for medical school and your living expenses.

Important Takeways

1. Before private lending, try to secure funding from public or non-profit sources, such as the BeMo diversity scholarship, free scholarships in Canada, easy scholarships in Canada or Canada Student Loans. These sources may not cover your entire medical school education, but every bit helps.
2. Consult with and get advice from as many people as possible, trusted people preferably, who can explain the differences between all these banks and their products. You can also take advantage of the financial professionals at your bank or a financial advisor who specializes in medical school planning.
3. Make a budget before you apply for a LOC (some banks make it a requirement to apply) and try to be as honest as possible with your assessment of your spending habits.
4. Interest rates, repayment options, and grace periods are all important, but follow your instinct as well. If you meet with a financial consultant at one of these banks and they impress you with their knowledge, advice and commitment to you, let that tip the scales in their favor.

Remember, you will be in medical school for four years, and if everything goes according to plan, there is your residency and setting up your own practice to think about, which means you’ll have an almost fifteen-year relationship with this bank. Make sure you are comfortable with them before you sign anything.

Conclusion

You will spend a lot of money to become a doctor; there’s no getting around it. But, fortunately, there are a lot ways you can finance your education, which involves using the best banks for premeds, and other sources. Hopefully, this article has put your mind at ease about how many options are out there to make your dreams come true. But while you may qualify for these LOCs or other loans, remember that they are serious commitments and you should take them as seriously as you take your studies.

FAQs 

To your success,

Your friends at BeMo

BeMo Academic Consulting

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