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Key takeaways:
If you already have a chequing account, you might wonder why you would need a savings account. While your chequing account lets you make purchases, pay bills and withdraw cash whenever you need it, when it comes to saving for future goals, it’s not always the best place to keep extra money.
Whether you’re new to banking or just getting serious about saving, here’s exactly how a savings account works and what it can do for you.
A savings account is a type of bank account that offers a safe and secure place to keep your money while earning interest. Unlike a chequing account, which you use for daily spending, a savings account helps you save and grow your money over time.
Whether you're putting away money for an emergency fund, a big purchase like a new car or just looking to grow your money, a savings account is a smart choice. The good news is, if you’re ready to open a savings account, it means you've got some extra earnings to put away.
- Keeps money safe and secure in a bank
- Earns interest, so your savings grow
- Helps prevent overspending by keeping savings separate from daily spending
- Easy to access when needed
- Good for short- and medium-term goals
When you deposit money into a savings account, the bank pays you interest as a reward for saving. The more money you save, the more interest you earn.
Interest is the cost connected to borrowing money. It’s what a lender charges the borrower for using its assets (aka money). When you put your money into a bank account, you’re the one earning interest.
The bank will add the interest to your savings — how much you earn will depend on the interest rate of the savings account. A higher interest rate means you earn more.
There are two types of interest that you earn with a savings account:
- Simple interest: Earned only on the money you put into your accounts
- Compound interest: Earned on both the money you put in and the interest you've already earned. This helps your money grow faster
The bank calculates interest based on your balance. Savings account interest rates vary depending on the type of account. These rates can change over time, so be sure to check in with your bank. Withdrawing money reduces the amount you earn in interest.
Depositing money into your savings account is easy and can usually be done from your phone or computer.
Since you can access your chequing and savings accounts easily through mobile or online banking, you can move money to your savings from your chequing in a few easy steps. If you’re on top of your budget and know what you can save monthly, you can set up an automatic deposit from your chequing to your savings, or you can manually transfer the money in. Of course, you can also do this in person at your local branch or an automatic banking machine (ABM).
If you bank with Scotiabank, you can set up this type of automatic savings with two smart savings tools by Advice+ available on the Scotiabank mobile app (you can only use one tool at a time). These tools help you reach your savings goals by automatically moving money between your eligible Scotia chequing account and your Money Master Savings Account based on your income, spending and the targets you set. Learn more about the tools here.
Yes! You can withdraw or transfer money out whenever you need it. Most savings accounts have limits on free withdrawals per month to encourage saving. Exceeding these limits may result in fees.
Most savings accounts have low or no monthly fees. However, since they’re targeted at saving rather than spending, banks may limit the number of free withdrawals per month or charge fees for extra transactions.
To avoid fees:
- Choose the right account for your needs.
- Know your account's withdrawal limits or any other fees that may apply.
- Track your transactions to stay within limits.
You can access your savings account through different ways, which can include:
- A debit card
- A mobile app
- A branch advisor
- An ABM
- Online transfers
Check with your bank for details on how to access your bank accounts.
A chequing account is best for everyday spending, like paying bills and making purchases. A savings account is best for growing your money over time. Learn more about how these types of accounts compare with our detailed guide.
There are different types of savings accounts with a variety of benefits. Here's a breakdown:
| Key features | Considerations | Best for | |
| Everyday savings account | Safe and easy to access Usually earns more interest than a chequing account No or low monthly fees |
Lower interest rates than HISAs or investments | Short- and medium-term savings Emergency funds |
| High-interest savings account (HISA) | Works similarly to a traditional savings account but offers a higher interest rate | May have withdrawal limits or fees | Medium- to long-term savings Emergency funds |
| Foreign currency savings account | Hold money in different currencies, such as USD and euros | Exchange rates may vary | Frequent travelers People who send or receive money internationally |
Not sure which account is right for you? Take our quiz to find out.
A savings account is a great way to reach your financial goals. Like any financial product, it has both advantages and disadvantages.
| Pros | Cons |
| Earn interest to help your money grow over time | Lower interest rates than investments |
| Easy access to funds when needed | Potential fees for extra withdrawals |
| Eligible for Canadian Deposit Insurance Corporation (CDIC) insurance | Tax on interest earned (unless it's in a Tax-Free Savings Account) |
Opening a savings account is quick and easy. You can do it:
- Online: Apply for an account online.
- In-person: Visit a bank branch, provide your ID, and open your account.
What do you need to open a savings account?
- A government-issued ID, such as a driver's license or passport.
- Proof of address (sometimes required).
- A Social Insurance Number (SIN) for tax reporting.
To manage your savings:
- Set up automatic transfers to grow savings effortlessly
- Track your balance regularly
- Limit unnecessary withdrawals to avoid fees
Bottom line
A savings account is a simple way to store and grow money while keeping it safe and accessible. Choosing the right account can help you reach your goals faster.
When selecting an account, consider what you're saving for and how long you plan to keep your money there. Also, consider how easy it is to access your money when you need it. Lastly, don’t forget to check the interest rates and any potential fees.
By using a savings account wisely, you can make your money work for you!
