Why use a bank?
Banks and credit unions keep money safe, make payments easy and help it grow. They also provide records of every transaction.
Main types of accounts
| Account | Best for | Features |
|---|---|---|
| Chequing account | daily spending, bills, paycheques | unlimited or many transactions; little or no interest |
| Savings account | saving | earns interest; limited withdrawals |
| High-interest savings | emergency fund, goals | higher interest; may have fewer free transactions |
| GIC | locking money for a fixed time | guaranteed rate; penalty or no access before maturity |
| TFSA / RRSP / RESP | tax-advantaged saving | registered with government rules |
Many young people start with a free student or youth account.
Ways to access money
- Debit card: pays from your chequing account instantly.
- E-transfer: send money to anyone with an email or phone number.
- Online and mobile banking: pay bills, check balances.
- ATMs: withdraw cash (other banks’ ATMs may charge fees).
- Pre-authorized payments: automatic bill payments.
Service fees
Accounts may charge service fees:
| Fee | Typical example |
|---|---|
| Monthly account fee | $4–$17 (often waived with a minimum balance) |
| Extra transactions | about $1 each over a limit |
| Non-network ATM | $2–$5 |
| NSF (non-sufficient funds) | about $45–$50 |
Example: A plan costs $10.95/month with 25 transactions. You make 31 transactions; extras cost $1.25 each.
10.95 + 6 × 1.25 = $18.45 for the month.
Compare that to a plan with unlimited transactions at $16.95.
Overdraft
An overdraft lets you spend more than you have, up to a limit, but you’ll pay a fee and high interest. Without overdraft protection, a payment can bounce with an NSF fee.
Interest on savings
Savings accounts pay interest, often calculated daily and paid monthly.
Example: $3,000 at 2% per year, roughly: 3,000 × 0.02 ÷ 12 ≈ $5 a month.
Safety
Eligible deposits at member institutions are insured by the CDIC (or provincial insurers for credit unions) up to set limits per category.
Protecting your account
- Never share your PIN or passwords.
- Watch for phishing emails and texts pretending to be your bank.
- Check statements monthly.
Worked examples
Example 1: Balance $420. Debit purchases $36.50 and $112.80; e-transfer in $60. New balance? $330.70.
Example 2: A $4 fee for each non-network ATM use, 3 times a month, for a year? $144.
Example 3: Which account for an emergency fund? A high-interest savings account (safe, accessible, earns interest).
Common mistakes
- Ignoring fees, which add up over a year.
- Using overdraft as extra money.
- Not tracking pending transactions.
Try it yourself
- A plan costs $4.95 plus $1.25 per transaction over 12. You make 18. Monthly cost?
- $2,500 earns 1.8% per year. About how much interest in a year?
- What happens if a payment is made with insufficient funds and no overdraft?
- Name two ways to access money in a chequing account.
Answers: 1) $12.45 2) $45 3) It may bounce and an NSF fee is charged. 4) e.g. debit card, e-transfer, ATM
Quick recap
- A chequing account is for daily spending; a savings account earns interest.
- Compare service fees and avoid overdraft charges.
- CDIC insurance protects eligible deposits.