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How do I open a savings account?
Find a savings account that meets your needs.
Submit your application. You’ll need to provide identification documents with proof of your residential address, such as your passport and/or drivers license.
Transfer the minimum initial deposit into your new account if applicable.
Set up automatic transfer of the minimum monthly deposit required to achieve the high bonus interest rate if applicable.
Start earning interest and putting your savings to work!
Why do banks offer high interest and bonus rates?
They are rewarding you with bonus interest for letting them borrow your money to loan to others while it sits in the bank. You may be limited in how often you can transfer funds from one savings account to another to take advantage of the highest interest rate available.
The introductory bonus rate offered by some providers is an incentive to open an account with them instead of another bank. This is for new customers only, which means you can’t apply for the same account again and again and expect to get the maximum rate.
Let’s get started building your wealth
Do you want to be able to afford a house, a new car or your children’s education not just ‘someday’ but in the next few years?
If you want to reach your savings goals, you need to start putting money away in a savings account. There are a lot of factors to consider when choosing the right savings account. You’ll be empowered with the information you need to make a decision that will help provide a successful financial future for you and your family. Read on to learn more.
What is a savings account?
A savings account is a secure bank account that earns you interest over time. These have higher interest rates than chequings accounts, enabling you to save for big ticket items like a car or the deposit on a house, or save money for a rainy day.
You may need to deposit a set amount of money into the account each month to earn the high interest rate.
You can use them to save up for a deposit on a house.
Drawbacks
You are usually required to deposit a set amount each month and make zero or minimal withdrawals in order to receive the high bonus interest rate.
Savings accounts sometimes do not come with a debit card, so you may be unable to access your cash as easily as you can with a chequings account.
Interest rates on your savings account
To encourage account holders to save (and in exchange for using your money to give out loans), banks will allow you to collect interest. Here are some important things to consider:
The interest rate on your savings account is usually variable, meaning it can change according to the market. If the interest rates on all savings accounts are low, it usually means the market rate is low.
In some cases, the interest on your account is calculated daily and paid monthly. This means you’ll get compound interest so you earn interest on your interest. You have to read the fine print to see if your account pays interest monthly to be sure you will get compound interest. Interest that is paid annually isn’t compounded as often and thus won’t be as lucrative for you.
It is important to pay attention to the requirements set in order to achieve the high bonus interest rate – this usually requires you to deposit a certain amount of money in the account each month and limits the number of withdrawals you can make.
Some savings accounts offer a high introductory variable interest rate which is higher than the standard variable rate for a set period (usually a few months). This is a reward for selecting their savings account. However, it’s important to be aware of how long the introductory bonus rate will apply for and what the rate will convert to after this period.
Savings accounts sometimes don’t come with a debit card like chequings accounts, however this will depend on the financial institution and the account you choose. If your account doesn’t come with a debit card, you will need to transfer your money from your savings account to your everyday account in order to access your funds.
Depending on the savings account you choose, there may be stipulations as to how often you can withdraw from the account. Savings accounts offering higher interest rates may not allow you to touch your money for extended periods of time, or may penalize you for doing so.
If you know you want to lock away your funds for a longer period, you may want to consider an investment like a GIC instead of a savings account.
How to compare savings accounts
There are certain features to keep in mind when comparing savings accounts, including fees, interest rates and your personal savings goals. Identifying your needs can help you choose the right savings account.
Most banks don’t charge a monthly fee for maintaining a savings account. Look for an account with no (or very low) monthly, annual and transaction fees.
Getting the highest interest rate means your money can work harder for you. You’ll want to check the conditions involved in receiving the bonus or introductory rate. The bonus rate might only last the first few months, so be sure to check the revert rate too.
You will want a different type of savings account depending on your savings goals. If you are saving to buy something in the short term (a few months to a year), high bonus rates and a lower standard rate may be beneficial. However, if you are saving to buy something over the long term (a few years), you might benefit more from an account with moderate but stable rates.
Some savings accounts allow you to withdraw money a few times each month, while some require you make no withdrawals at all. If you anticipate needing regular access to your savings, you won’t want an account that will charge you for doing so. However, being charged for accessing your account is also a great incentive for not touching your money and letting it grow. Compared to investments like GIC’s and mutual funds, savings accounts offer relatively easy access to your money.
Some banks require you to link your savings account with an everyday account in the same bank to qualify for their interest rate or bonus rate offer.
If you can consistently deposit money into your account, you should look for accounts offering bonus rates for meeting monthly minimum deposits. Otherwise, an introductory bonus savings account might be best.
How to get the bonus interest rate on a savings account
For an introductory bonus offer, the bonus interest rate is typically awarded for a few months only and you need to be a new customer.
For a bonus savings account, the bonus interest is usually awarded when you’re able to deposit a certain amount per month and make no withdrawals. It usually doesn’t matter if you’re a new customer or not, but there may be restrictions around deposit amounts.
You will also need to be within the balance your bonus rate applies to. If you have over a certain amount of savings, you may incur the standard rate.
How do I find a savings account for my situation?
Are you…
Description
Typical features
Youth and student
Whether you’re studying, doing an internship or under 18, there are still a range of accounts available for you. Every dollar counts at this stage, so check if you’re eligible for a low-cost student account.
Fee-free everyday banking
Linked debit card
24/7 access to your banking
Saving for a goal
Setting a goal and developing a savings plan is easier than you think. There are a few ideas that can help, including taking advantage of investment products like GIC’s. Also, take note of the interest rate and understand the features you can use.
Investment products available
Competitive interest rates
Automatic savings plan
Retired and seniors
Whether you love the convenience of Internet and phone banking, or prefer face-to-face banking in a branch – financial institutions offer a range of options.
Competitive interest rates
Fee-free everyday banking
Pensioner benefits
Accounts for children
Most parents want to help their kids manage their money responsibly and learning to save is an important skill for the future. Help your child’s savings grow by choosing the right account.
Bonus interest awarded for saving
Moving to Canada
Whether you’ve moved to Canada for work or study, Canadian banks have a wide range of options for you. You’ll need an everyday bank account for your day to day banking and most likely a savings account to store any surplus cash.
Immigrant services
Multilingual ATMs and bank staff
24/7 banking
Cheap overseas money transfers
Multi currency accounts
Looking for an online account with no fees
Fee-free banking means every dollar you deposit gets you closer to your savings goal. Plus, online accounts typically offer higher interest rates.
Competitive interest rates
24/7 banking
Fee-free everyday banking
How to apply for a savings account online
While it can vary between providers, you will usually need to do the following to apply for a savings account online:
Fill out an online application, where you will need to verify your identity if you’re a new customer.
Deposit funds into the account to get your savings plan started.
You’ll likely need the following documents to apply online:
Your personal details. This includes your full name, address, phone number and email address.
Identification. A driver’s licence, passport or birth certificate. If you’ve recently arrived in Canada, you will likely need to supply a copy of your temporary residence card or your permanent resident card.
Emma Balmforth is a Producer at Finder. She is passionate about cryptocurrency, credit cards and loans, and enjoys helping people understand the often confusing world of finance. Emma has a degree in business and psychology from the University of Waterloo. She wants to help people make financial decisions that will benefit them now and in the future.
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