Taking care of your money is an important responsibility. Having a bank account helps you protect and manage your money. When you open an account with a bank, your bank can help you handle that job. In Canada, banks are businesses that handle money and provide financial services.
Once you have an account, there are many services you can use and different ways of doing your banking. You can bank at your branch with a banking representative; you can do it at an Automated Banking Machine (ABM), over the phone, or by Internet using your computer.
Canadian banks offer different accounts and services. Keep in mind that every bank has its own name for each of these.
Why have a bank account?
1.Safety and Security: A bank is a safe place to keep your money when you are not using it. Your money and your personal information are protected.
2.Savings: A savings account is a way to save your money so it will be available for both your short-term and long-term needs.
3.Earn interest: On some bank accounts, the bank pays you a sum of money called interest. This interest helps your money make more money. The more money in your account and the longer you leave it in, the more interest you will earn.
4.Access to a variety of banking services: A bank account is not just a place to store money. Many people use banks to process transactions and do other financial activities. For example, if you have an account called a chequing account,one of the ways you may pay bills is by cheque. This is a written order to the bank to pay a certain amount of money from your account. To pay your rent, for instance, you can write a cheque and mail it rather than go to a bank, take out cash and bring it to your landlord yourself. There are many different banking services you can use, including getting assistance from your bank's customer service representatives, paying bills, using banking machines, making direct debit purchases and having direct deposit of money owed to you. Many of these services are discussed in this booklet.
5.Record-keeping: With a bank account, you receive account records to help you keep track of your money. This way, you know how much you spend and what you spend it on. It's a good reference: When you need a loan or want to apply for a credit card, your bank account shows how you have handled your finances in the past. This is a good reference that may help you get your loan or credit card application approved.
6.Convenience: A bank account offers convenience in helping you manage your money. For example, with a bank account you will be able to get a bank card, also called a debit card, that allows you to use over 16,500 banking machines across Canada. Banking machines provide 24-hour access for making deposits, withdrawals, paying bills and transferring money. A bank account also gives you access to telephone or Internet banking, where you use your phone or computer to do things like pay bills, transfer money between accounts and get updates on your account.
Banks offer three general types of accounts:
Each bank has different names for these accounts. But whatever name is used, each type of account will have most of the same features. Look at these features and your personal needs to decide which suits you best. Then, look at the service charges.
- savings account
- chequing account
- combination account
One type of account you may wish to consider is the joint account. This is an account opened by two or more people who can each put money into it. One or more people may have to sign when taking money out.
The Savings Account
If you want to save some money for your short-term needs, think about opening a savings account. This type of account is a good choice if you don't need to use your money right away or you don't intend on having much account activity in a month. The bank will pay you interest. The amount of interest will vary, depending on the type of account you choose and interest rates in general. You may take your money out any
The Chequing Account
If you want to keep some money handy for paying bills or personal expenses, you should think about opening a chequing account. This type of account is good for money you expect to need from day to day. You may take your money out at any time in person, at a bank machine, by writing a cheque or by direct payment. Chequing accounts usually have lower service fees than savings accounts. Some chequing accounts do not pay interest and some do (a chequing account usually pays a lower rate of interest than a savings account). Ask your bank for more information.
The Combination Account
If you want to save some money but you also want to keep some handy to cover expenses and manage your day-to-day finances, you should consider opening a combination account. This type of account is part savings and part chequing. You may take your money out any time in person, at a bank machine, by writing a cheque or by direct payment. Interest is usually paid on these accounts on amounts above a set level.