Among many other banking services available in Canada, people can open their accounts. There are several types of accounts you can open, one of them being a savings account. Having a savings account is a smart thing. But to have a real effect, you must consistently add more money to it. There are many things to consider when choosing a savings account. Go through relevant information and consider all the options available. Here is what you need to know about savings accounts in Canada.
Savings Account Explained
These are financial bank accounts into which people deposit money periodically to save up that money while earning interest over time. They all have limitations to how many times the holder can withdraw funds from it every month. That’s because these accounts are meant to be used to save money. They are for long-term financial plans and saving for something significant happening at least five years after the account is opened. At the same time, it can serve as an emergency fund in case of unexpected events, health issues, or money troubles.
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Savings Account Features
All savings accounts come with different features. It depends on the bank and what their terms are. However, here are some of the essential features that you should be looking for in your account:
Instant use
Most savings accounts can be opened in minutes. Whether you apply for one online or in person, you should expect your account to be operational instantly.
No minimum balance or deposit
Saving money doesn’t always go as planned, so you won’t always be able to make duplicate payments as planned. At the same time, you never know when an emergency might pop out. For these reasons, it’s best to find an account that has no minimum deposit or balance requirements so you can save up as much as you want whenever you want.
CDIC insurance
The Canada Deposit Insurance Corporation is an important government institution in Canada that licenses and regulates banks. Banks who are members of the CDIC offer coverage to their customers. If the account vanishes for some reason or the bank goes down, you will be reimbursed with up to CAD 100K.
Ability to transfer funds from other accounts
Most people want to transfer funds from their chequing bank account directly into their savings account. You should be able to do this. Once you’ve received your monthly paycheck and organized your finances, you can instantly set aside how much you can save.
No ongoing fees
Look for a bank that doesn’t charge any ongoing or maintenance fees for your savings accounts. After all, you want to save money over time and not spend it on your account.
Benefits of a Savings Account
You might be wondering why you should open one of these accounts. Here are some essential benefits to consider:
They are inexpensive
Opening up a savings account might cost you a one-time fee of CAD 20 to CAD 80. However, some banks won’t charge you anything whatsoever. Some banks want to use people’s money to invest, which is how they profit.
You don’t have to worry about savings
We always need money for something. But do we need all of those things? Most people can’t control themselves with their spending. With such an account, you can set up an automatic deposit to instantly receive payments from your paycheck at the start of the month. Set up a fixed amount, and don’t worry about saving.
Secured savings
Believe it or not, banks give you more security than keeping money home under the mattress. Apart from the banks’ guarantee and security measures, you can also rely on CDIC insurance so your money won’t go to waste in any given scenario.
Save more
Savings accounts have an interest based on which you can earn by saving. The interest isn’t high, but you can pile up a solid sum of money over time. Simultaneously, the more you put in your account, the higher the interest will be.
Bottom Line
A savings account is a great way to keep some money on the side in case of emergencies. It also streamlines your saving efforts and makes accumulating a decent amount of savings easier. Don’t count on earning a lot through interest unless you plan on keeping a lot of money in your account.