What Types Of Bank Accounts Are Out There?

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Many people are aware that there are two main types of bank accounts in Canada: chequing and savings accounts. But if you’re looking to open a bank account, you’ll learn that there are different types and variations of chequing and savings account out there, even within the same bank.

The best bank account for you depends on your needs and the unique features of each account.

Chequing accounts

Chequing accounts typically have low interest rates because they are designed for you to take care of your day-to-day banking needs and financial transactions. Money can be quickly and easily deposited into your chequing account and withdrawn when you need it.

You can use your chequing account to pay bills, make purchases online, transfer money to friends, write cheques, withdraw cash from an ATM or teller, and receive direct deposits.

Chequing accounts usually have a monthly maintenance fee and fees for additional services like getting paper statements, or may come with higher fees, including minimum balance fees, transaction fees, and non-sufficient funds fees.

The types of chequing accounts include:

● Personal chequing account (accessible by only you)

● Joint chequing account (accessible by more than one person, for example, you and a spouse)

● Student chequing account (used for those in post-secondary school, may have lower fees or unlimited transactions)

● Business chequing account (used for business owners to separate their business and personal transactions)

● U.S. dollar chequing account (allows individuals to conduct transactions in US dollars)

Savings accounts

Savings accounts are designed to grow your money by earning interest on the balance in your account. The intention is for you to let the money sit in your savings account for an extended period, so it generally isn’t as easy to move money out of a savings account as a chequing account.

With fewer transactions from your account, you likely won’t have monthly maintenance fees on your savings account. But because you’re meant to have fewer transactions, you could pay a higher fee if you go over any transaction limits.

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The types of savings accounts include:

● Basic savings account (higher interest than a chequing account, but lower interest than a high-interest savings account)

● Joint savings account (accessible by more than one person, for example, you and a spouse)

● High-interest savings account (has a higher rate of interest than a basic savings account)

● Registered savings account (has tax-deferred or tax-sheltered status)

● Business savings account (used for business owners to separate business savings from personal savings)

● Children’s savings account (designed for anyone under the age of majority to save money)

Hybrid bank accounts

Some banks offer a hybrid bank account, which functions as a combination of chequing and savings accounts. They often have higher interest rates and lower fees. However, they are usually offered by online-only banks, so to access your money, you’ll have to first transfer it to an account at another bank or credit union.

What to look for when you open a bank account

If you’re looking to open a bank account, consider what you’ll need:

● Do you want easy access to your money so you can conduct many transactions? If so, you’ll need a chequing account.

● Do you want to save your money and let it grow over time? If that’s the case, you’ll need a savings account.

Next, look at the various fees, interest rates, and transactions you’ll need to find the account that works best for you. Also, consider whether someone else will regularly use the account and use it for special transactions, such as US transactions.

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Final thoughts

Taking those factors into account when you open a bank account will enable you to pick the best account for you.

Remember, you know your financial situation the best, so don’t be afraid to voice any concerns or questions to your bank.

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