Canada has many financial institutions, including banks, credit unions, caisses populaires and trust companies. They offer a variety of services with different fees for each service. It’s sometimes hard to know how to make the best use of them. This module will show you how to get the banking services you need at the best price. It will help you protect yourself from identity theft and other types of fraud. In it, you will learn:
- what are the basic services that financial institutions offer
- how to choose the type of banking account you need
- what your rights and responsibilities are when using a financial institution
- how to keep your accounts safe
- what to do if you think someone may be using your account illegally.
Throughout the module, you will find learning tools that you can use now and in the future:
- an online account selector that compares the features and costs of banking accounts in your province or territory
- an interest calculator that lets you estimate how much you can earn with a savings plan
- videos that give you tips on getting the most from your banking services
- a checklist to help you identify the type of account you need
- an action plan of steps to help you manage your banking services.
To choose the best banking plan for you, you first need to know a little about the services financial institutions offer and how you can use them. In this section, you will learn about:
- basic banking services, such as deposits and card services
- how the deposit insurance system keeps your deposits safe
- how to use banking services for your everyday needs.
A financial institution is an organization that provides banking or other financial services for customers. The term banking refers to the deposit, loan and similar services that these financial institutions offer.
While there are many types of financial institutions, in this module the term refers to institutions that take deposits, such as banks, credit unions, caisses populaires and trust companies. Most institutions can offer a similar range of services, although some may not offer everything. While banks and trust companies are owned by investors, credit unions and caisses populaires are owned by their members.
Banks and federally chartered trust companies are regulated by the Government of Canada, and credit unions can choose to be federally regulated. Credit unions, caisses populaires and provincially chartered trust companies are regulated by the provincial and territorial governments.
- Account: An arrangement with a financial institution to let you deposit, transfer and withdraw money, subject to terms that are defined in the account agreement. Savings accounts and chequing accounts are the two main types of deposit accounts
- Account agreement: An agreement that lists your rights and responsibilities and the financial institution’s rights and responsibilities regarding the account
- Transaction: Any business done through your account, such as a deposit, a cash withdrawal, a cheque or a bank charge
Banks and other financial institutions offer a wide range of financial services. The main ones for most people are deposit services, card services and loans.
You can deposit your money at a financial institution to keep it safe until you need it. In fact, deposits in most financial institutions are guaranteed up to a certain amount (see Deposit insurance).
When you deposit money in an account, the financial institution may pay you interest. Different institutions usually pay different rates of interest, and interest is higher on some types of accounts than on others. That’s why it’s important to compare and choose the account that best meets your needs.
- Savings accounts can pay higher rates of interest than other banking accounts, but they may have extra charges when you take money out of the account.
- Chequing accounts pay low interest or none at all, but you can write cheques or make withdrawals at any time.
- Chequing/savings accounts combine some features of both types of accounts.
Other ways to hold your money are also available, which may pay a higher return than interest on banking deposit accounts. You can read more about them in the Investing module.
You pay for your banking transactions with a fee, usually a set number of transactions for a flat monthly fee or a fee for each transaction. (See Banking accounts and packages for more on fees.)
When you deposit a cheque to your account, financial institutions will normally hold the money for several days before they let you withdraw it. This gives them time to transfer the money from the cheque writer’s account to yours, and to confirm that there is enough money in the account to cover the cheque. You may be able to ask your banking institution to reduce or waive the delay.