Savings Account A savings account is a type of bank account that offers customers safe-keeping for money, as well as an interest-earning opportunity. There are basically two types of banks accounts that one can open in Canada. The other one is a checking account. Checking accounts and savings accounts both have their pros and cons. How a Savings Account Works A savings account works on the principle of lending and borrowing. When one opens a savings account, he deposits money in that account that pays the owner of the account a certain percentage of interest on a monthly basis. In this set-up, the account holder is actually lending money to the bank. The bank then invests the money and shares part of the profit with the account holder. Banks lend money to consumers in the form of loans – mortgage loans, personal loans, or secured loans. These loans earn interest that can be shared with savings account holders. Savings accounts offer owners a great way to store and protect their cash. Rather than placing money under the bed or inside the closet, it is best to have them kept in the hands of reputable banks. For people who don’t really need the money for extended periods of time, savings accounts are a great way to keep it safe and have it earn interest. When not Use a Savings Account Savings accounts usually have a maintaining balance and offer higher transactions rates than checking accounts. Before deciding to open a savings account, remember that it is designed for money deposits intended to earn interest. If one needs an account for money that is to be often withdrawn, a checking account is a better option since it is designed for that purpose. A checking account may offer lower interest rate, but it also offers lower transaction fees. Opening a Savings Account To open a savings account in Canada, shop around for the best deals. Each bank offers different interest rates and required balance. To access information on Canadian banks, check out the Internet and find what type of accounts the big banks have on offer (e.g. Scotia Bank, Canadian Imperial Bank of Commerce). To open an account, at least 2 forms of identification are needed. The good thing with banks today is that they offer competitive interest rates. To increase the earning potential of cash deposited in a savings account, take your time and look for banks that offer high interest rates. Higher interest rates means more money earned. The maintaining balance for these accounts differs from bank to bank. Be careful not to leave an amount on account that is lower than the maintaining balance. Banks charge high fees in these circumstances. It is always good to ensure that the balance does not go below the specified amount. Withdrawals and Balance Inquiries Withdrawals can be done at ATMs scattered all over the country. However, some banks also offer online banking. Money can be transferred from one bank account to the other using the Internet. As for balance inquiries, it can be done using an ATM, over the phone or online.