An important question you’ll face regarding your finances is what type of bank account you should have. With so many options available to you, how do you compare bank accounts in Canada to find the right one for you?
Step 1: Figure out what you need.
Your most basic question is whether you need a chequing or a savings account. This comes down to your goals and your needs.
Ideally, you should have both a chequing and a savings account. So, if you already have one but not the other, this is a great time to address that issue.
Beyond that, look at why you’re opening the account and ask what you’ll use it for.
● Will you need access to the funds in the account every day? If so, you’ll want a chequing account.
● Are you hoping to save money for a big purchase or an emergency? A savings account will be better for you.
Step 2: Explore the options available to you.
Once you know what type of account you need, it’s important to explore all the options available to you based on your financial situation and how you’ll use the accounts. Some accounts come with monthly fees, while others charge transaction fees. Different accounts offer different interest rates, and some require you to maintain a minimum balance.
Fees
When you compare bank accounts in Canada, look at how the banks structure their fees. Among the fees, you could pay are the following:
- Monthly fees Transaction fees
- Transaction fees Monthly fees
- Maintenance fees
- ATM fees
- Non-sufficient funds fees/overdraft fees
These fees all eat into your money. If you know how you’ll use the account, you can choose a bank account that maximizes your use while minimizing how much you’ll pay in fees. If you don’t do many transactions, transaction fees might not concern you as much as the interest rate. If you aren’t using ATMs regularly, you won’t need to worry as much about ATM fees.
Interest rates
If your goal is to save money, you’ll need to know the interest rate to decide which savings account is best for you. A high interest savings account might sound like a great option, but remember to look into any fees, as those can offset the interest you accrue.
Interest rates on savings accounts in Canada run a wide range, so it’s crucial that you research your options before deciding.
Some savings accounts also come with a minimum balance before you accrue interest, so you’ll need to explore how quickly you can meet that minimum.
Step 3: Include any special circumstances in your review. Many banks offer options for students or seniors, for example. These specialty bank accounts may have lower fees, no fees, or include unlimited transactions. Depending on your circumstances, look into whether you have additional options for bank accounts geared to meet your needs.
If you need access to U.S. dollars, you might need an account that makes it easy to carry out transactions in US dollars. Likewise, if you’re looking for an account for your business, you’ll want to look into business bank accounts rather than personal accounts.
Step 4: Explore benefits.
Some banks offer incentives to open accounts with them, provided you meet specific requirements. Look at any incentives offered, determine whether opening an account is worth it and you’re able to meet the requirements for the offer.
Some banks offer money in exchange for opening an account, keeping the account for a set time, and setting up a pre-authorized payment or direct deposit.
Questions to ask
Before you open a bank account, make sure you ask some important questions:
- What are the monthly maintenance fees?
- What is the interest rate?
- Are there any transaction limits?
- What are the transaction fees?
- Is there a required minimum balance?
- How can I access the money in this account?
- Can I meet the requirements if there is an incentive to open an account? Ultimately, you want a bank account that allows you to access your money in the ways you need while minimizing the fees you’ll pay.
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