Opening Your First Bank Account


Opening your first bank account is a big step in your financial journey. Whether you’re young, new to the country, or just never got around to it, taking the plunge to open a chequing or savings account can be intimidating and overwhelming. You’re entering the financial world; no more storing loose cash in your piggy bank or spending it as soon as it comes in. To make this transition as easy as possible, it’s important to look at a few key factors that may affect what account you feel is best for you.

Let’s take a look at some of those questions!

Why Do I Need a Bank Account?

Now, at this point, you might be asking yourself, “Why do I even need a bank account?” Maybe you don’t have a job yet, or you like having coins you can touch and spend and opening a bank account would replace that with a boring card. While that might be true, bank accounts come with many benefits that physical money can’t offer us, and they’re valuable even if you don’t have a lot of money yet.

Bank accounts can offer:

  • security
  • easy access to our money
  • account balance information
  • spending information
  • online purchases
  • interest
  • money transfers
  • protection against fraud

Bank accounts are an excellent tool for everyone and can open the door to your future by making it easier to set goals, track your money, and even put your savings to work for you by earning interest!

Is My Money Safe?

The first question you should always have about money is simple: Is my money safe?

When you eventually decide it’s time to enter the world of investing, you’ll find most come with some level of risk; housing prices go up and down, stocks can change from hour to hour, and even bonds and guaranteed investment certificates (GICs) can lose you opportunities as interest rates change. With your first accounts, stability is essential. If you plan to spend the $50 you made last week at the movies tomorrow, the money in your account must be accessible, and your balance can’t change unexpectedly.

So, how do you know if the account you’re looking at will keep your money safe? Thankfully, we have something called the Canada Deposit Insurance Corporation (CDIC) in Canada. CDIC is a type of account insurance program that keeps your money safe. Financial institutions like banks and credit unions pay CDIC to protect your money. If something were to happen to the bank or financial institution where your money is deposited, CDIC will ensure you get your money back. That means, by storing your money in a CDIC member institution, the money in your account will always be safe and there when needed. The list of CDIC member institutions is long and includes all major banks in Canada. You can search the complete list to ensure your money is safe.

Do I Need a Chequing or Savings Account?

Two main bank account types are available in Canada: a chequing account and a savings account.

A chequing account is designed for everyday spending and offers an access card, flexible transaction limits, direct deposit and automatic withdrawal options, and sometimes basic rewards or interest options. Chequing accounts are highly versatile, and most banks have multiple chequing accounts available so that you can find the right one for you.

Two of the most valuable features of a chequing account are the number of transactions and your monthly fee.

  • The number of transactions or purchases an account allows tells you how many times you can use it before paying an additional fee. If you plan to use your account a lot, you’ll want to ensure you have a card with enough transactions or consider using an e-transfer if it’s included.
    • The monthly account fee is the cost of accessing the account. Accounts with more features often have higher monthly costs. Always check for any discounts you may be eligible for, like a student discount, newcomer discount, or senior discount.

A savings account is designed for short-term savings and goals. They offer limited transactions, flexible transfers, and interest on the account balance. While all major banks have savings accounts, the number of options may be limited.

Two of the most valuable features of a savings account are the number of transactions and transfers available and the interest rate.

  • Savings accounts often offer fewer monthly transactions than a chequing account. Some savings accounts don’t provide free transactions, and others don’t offer direct purchasing options. Consider how you intend to use your savings account and look for one that meets your needs, but be careful not to waste your money on extra fees.
    • One of the best tools of a savings account is the interest you can earn. Interest is a key feature of many investment strategies and is essentially money you’re given as a “thank you” for using the account. Interest is earned at pre-determined points, often monthly or annually, and the amount added to your account is a percentage of your current balance. Earning interest is the main reason why savings accounts are recommended for short-term goals, as your money can work for you even as you work for it! Pay attention to the interest rate a savings account is offering (the higher the interest rate, the more you will earn), and remember that, as valuable as earning interest is in a savings account, paying interest on credit cards or loans will make your purchases more expensive, so it’s a good idea never to borrow more money than you can afford to pay back within the month.

The choice of whether to open a chequing or savings account will depend on how you plan to use it, but the answer may be both! Chequing and savings accounts offer different features that complement one another. A chequing account is an excellent primary resource for making purchases and transferring money to others, whereas a savings account earns you interest on the money you’ve set aside for future goals. Using both accounts together will make it easier to minimize the fees you pay on transactions and keep your spending and savings balances separate, decreasing your risk of accidentally spending what you’ve saved.

How Do I Pick the Right Account?

You’ve decided you’re ready for a bank account, know the money you store there will be safe thanks to CDIC coverage, and considered the features of chequing and savings accounts. Now what? How do you actually decide what account or even what bank is right for you?

Picking a bank or other financial institution is a personal decision. It’s not a permanent choice, but moving banks can be a lot of work once you build a network somewhere with multiple accounts, direct deposits, automatic withdrawals, credit cards, loans, or other products. Therefore, it’s worthwhile to take the time to think about the options available and find a bank that you believe can grow with you.

Here are some questions you can ask when trying to decide on a bank:

  • Do you know anyone who uses the bank? If yes, do they like banking there?
  • Where is the closest branch or ATM? If you plan to visit the bank a lot to deposit money, you won’t want something far away.
  • Would you prefer an online-only bank? You can’t set up an appointment to meet with someone in person, but they may offer better interest rates or lower fees than the competition.
  • Do they have good reviews? If the accounts’ costs and features are similar, customer service and experience can be deciding factors.

The Financial Consumer Agency of Canada has created an account comparison tool to help you see what’s available in your province. You can even filter by specific features like discounts, transaction minimums, and maximum fees.

Don’t be afraid to open your first bank account. It’s an exciting step into your financial future and can open the door to countless opportunities. Savings accounts can even make you money just by leaving it alone! Do your research and find an account that’s right for you, but don’t be afraid to make a change if you’re unhappy. Take charge of your finances, and start working towards the future of your dreams.

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