Bank accounts in Canada have various features designed to help bank customers manage their finances. When you’re looking to open a bank account, it’s a good idea to familiarize yourself with the features of the different types of accounts. This way, you pick the account that best meets your needs.
Here are some common features of bank accounts.
Direct deposit: This allows your employer to deposit money directly into your account, saving you the time and hassle of receiving a cheque and then taking that cheque to the bank or an ATM to deposit.
Pre-authorized debits: This allows the company or person billing you to withdraw the money directly from your account. You fill out a pre-authorized debit agreement that enables the biller to withdraw the money. The pre-authorized amount can be fixed (the same every month, such as for a loan) or variable (different each month, such as for some utilities).
Some uses for pre-authorized debits include:
- Mortgage payments
- RRSP contributions
- Credit card payments
- Utility payments
- Insurance premiums
- Car payments
Online bill payments: If you’d prefer to take care of your bill payments yourself, you can set up your account and pay your bills online. You add the account information of the bill you’d like to pay, and whenever you need to pay, you go online to make the bill payment —no more standing in line to pay your bills. Some accounts allow unlimited online bill payments, and others may charge a transaction fee.
Online and Mobile banking: Online and Mobile banking lets you access your bank account and initiate financial transactions from a computer, mobile device, or tablet. You can see your balance, transfer money between your accounts, pay bills, send money to friends. Most banks also have an app, so you don’t have to navigate to the website. Instead, you can open the app on your device to access your account.
Overdraft protection: This protects you when you don’t have enough money in your bank account to pay for a transaction (such as a bill payment or a purchase). It helps you avoid declined transactions, non-sufficient funds fees, and late payment charges.
Banks often offer one or both types of overdraft protection.
- Basic overdraft protection, where the bank lends you money to cover the transaction up to a set limit (you’ll pay interest on the overdrawn amount and may pay a bank fee for the overdraft)
- Linking your bank account to a different financial product so that the money might come out of a separate bank account or the credit card of yours (the bank may charge a transfer fee)
Overdraft alert: Some banks now offer a balance alert that lets you know when a withdrawal has been initiated that requires more money than you have in your account. This way, you can avoid or minimize any overdraft or non-sufficient funds fees you might otherwise pay.
Transactions: Depending on your bank, you may get a set number of free transactions or pay a monthly fee to cover all your transactions. As a perk, some banks may also offer free withdrawals from out-of-network ATMs in Canada.
Banks offer many different features for their accounts, and exact features vary depending on the bank and the type of account. It’s up to you to decide what bank account features are most important to you.