Savings accounts are a good place to save for short-term goals or keep cash for emergencies. Once you’ve built up some savings, look at other options for making your money earn more. You can open a savings account at most banks, trust companies, and credit unions.
How savings accounts work
- Deposits – You can deposit any amount of money at any time. Your employer may be able to deposit your pay directly into your account.
- Withdrawals – You can get money out of the account easily and quickly by using a debit card, withdrawing cash at a bank machine (ATM) or withdrawing cash through a bank teller. There may be daily limits on how much you can withdraw.
- Interest – You will earn some interest on the money in your account. Savings accounts usually pay slightly more interest than you would get in a chequing account. You may get a higher interest rate if you keep more than the minimum balance in your account.
- Fees – Fees vary, depending on the type of account you choose.
- CDIC protection – Your money is protected, up to set limits, through the Canada Deposit Insurance Corporation (CDIC). This doesn’t apply to U.S. dollar accounts.
Other things to consider
- Low return – Your money will earn interest in a savings accountSavings account A bank account intended for depositing funds. Pays interest and lets you withdraw cash at any time.+ read full definition, but probably not as much as in some other, low-risk investments. It also may not keep up with inflationInflation A rise in the cost of goods and services over a set period of time. This means a dollar can buy fewer goods over time. In most cases, inflation is measured by the Consumer Price Index.+ read full definition.
- Fees – You may be charged high fees for making transactions.
- Interest is fully taxed – Learn more about how investments are taxed.
Savings accounts — especially high-interest accounts — usually pay slightly more interest than you would get in a chequing accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition.