Choosing a banking account package can be confusing. Your financial institution may offer a dozen or more different types of account packages and plans—some for young people and students, some for seniors, some that allow chequing, some that do not. And the fees are hard to compare: some accounts charge a flat monthly fee, while others charge for each transaction. And they pay different rates of interest.
How do you know which account to choose? In this section, you will learn:
- the main features that chequing and savings accounts offer
- the interest paid and how it affects your savings
- the account fees you’ll pay and how to reduce them
- how to read your account statement.
Financial institutions in Canada offer a wide variety of deposit accounts. To match your needs to the services they offer, they need to know a bit about you and how you expect to use a banking account. For example, they need to know:
- if you are a member of a special group, such as students, youth or seniors (they may charge lower fees for some groups)
- the minimum balance you will have in the account each month (they may not charge regular fees if you keep a minimum amount in the account)
- the number of transactions you expect to do in a month (sometimes it’s cheaper to pay for each transaction, sometimes it’s better to pay a flat monthly fee)
- if you need any special services on a regular basis, such as:
- certified cheques
- money orders and bank drafts
- stop payments
- travellers’ cheques
- personalized cheques
- overdraft protection
- cheque returns
- safety deposit box
- access to bank machines that are not owned by your financial institution
- email money transfers.
The two main types of accounts are savings and chequing accounts:
Some financial institutions also offer combined chequing/savings accounts that offer features of both types of accounts. You earn a small amount of interest and you can also write cheques. You will likely get less interest than with a regular savings account, and you may pay higher fees when you write cheques.
Financial institutions offer other alternatives if you won’t need to withdraw your money for a few months or more, such as term deposits or investment accounts. Ask the customer service representative about plans that might make more money. For more information, see the Investing module.
Your financial institution will give you a record showing the money that goes into and comes out of your account: your account statement. The type of record depends on the account you have. It could be online or a monthly statement that is mailed to you. (Your financial institution may charge a fee for paper statements.) Some accounts give you a passbook in which you can print the transactions at a teller machine or in your branch.
The account statement will look similar to the statement below, whether it is printed on paper or displayed on a computer screen.
Check your account statement at least once a month, either online or on your printed record. Watch for any transactions you don’t recognize. This is your chance to make sure that no one has used your account improperly, and that there are no mistakes.
If you find any unusual transactions, first check your own records to make sure you haven’t forgotten anything. If you are sure the statement is wrong, contact your financial institution and explain what the problem is.
|ABC Bank Footnote1
1425 Names Street, PO BOX 4000
Chequing Account Statement
|John Jones Footnote2
1643 Dundas St. W Apt 27
Toronto ON M6K 1V2
|2012-03-18 to 2012-04-19 Footnote3