Savings accounts are good for short-term saving. You can withdraw your money on short notice.

Until you're 18/19 (age of majority in your province), you can only open a savings account. No other saving / investing products are available to you (unless you share an account with an adult family member).

A savings account can serve as a cash buffer that you draw money from in the event of an emergency or when you’re running low on funds. You can access your money whenever you want.

You won't need your retirement savings for a long time so being able to withdraw them on short notice isn’t of much value. If you want your retirement savings to grow faster, you'll need to consider investing them - savings accounts don't earn as much as investment accounts.

While it’s technically true over a long period of time, don’t count on it. If you deposit $100 in a savings account that pays 3% yearly interest, compounded monthly, you’d have to wait 24 years until you have $200 in your account, assuming you don’t make any additional deposits.

Calculating how long it takes your money to double at a certain interest rate requires knowledge of logarithmic functions.

Tip: Use the rule of 72 to estimate how long it’ll take – with very little math.

• Let’s say you have some money in an account that pays 3% per year.
• Divide 72 by 3, which equals 24 - this means it would take you about 24 years to double your money.

Savings accounts have no monthly fee, they pay you monthly.

Every month, your bank pays you a small percentage of your savings account's balance as interest. The interest is deposited into your account and compounded daily (you earn interest on previous interest).

• Accounts with higher interest rates pay more.

They're used to transfer money between your chequing and savings accounts.

• Your bank may limit the number of free monthly transactions (money leaving your account) and e-transfers.
• Savings accounts offer unlimited deposits – you can add money however often you like.

Don't completely ignore them but don't be swayed by them.

Always consider the regular rate first. A special promotion will run out after a few months and you'll be stuck with regular rate.

She can ‘link’ her savings account to her chequing account online and make transfers between the accounts. It’s easier than going to the bank and physically making regular withdrawals / deposits in cash. Linking accounts will be covered later in the story.

Britney doesn’t understand that “3% compounded monthly” doesn’t mean 3% of her balance every month. It means that, every month, she will earn 0.25% (3% / 12 months), on her current balance. Additionally, any interest her savings earn will automatically be deposited in her account – and become part of her balance. Next month, she will earn interest on her initial balance, plus interest on previous months’ interest.

She understands interest rates but isn’t looking at the number of free transactions and e-transfers. If you don’t have enough free transactions, moving money between chequing and savings accounts can become quite costly.

You'll have to provide your SIN (social insurance number) because you’ll be paying tax on the interest you’ll earn.

Both savings and chequing accounts are bank accounts – they’re opened the same way.

• Banks need two pieces of ID: a government-issued photo ID and proof of address.
• The bank will want to know: your name, address, date of birth, telephone number, whether you're a student, and where your income comes from (family, gift, part time / full time work are all good answers, so are being a student / looking for work). They will ask where you pay taxes - probably ‘Canada'.
• You'll get a customer card to identify your account. The banker will help you set up online / mobile access.

There are no age restrictions on savings accounts. Anyone can open one – even if you’re not 18 yet.

Although monitoring your accounts regularly is a great habit, it wouldn’t have helped Britney much here because the issue is bank-wide. If there was a problem with just Britney’s account, the sooner she notices and lets the bank know, the more likely it is that they’ll be able to fix it.

If Britney had closed her old account once her new one was open, this could have been avoided altogether. Always close old bank accounts if you don’t need them anymore.

If a bank goes bankrupt, your savings account is automatically insured by the government (up to $100,000). You can’t insure an account against fraud – if it wasn’t your fault and you kept your account secure, the bank should cover your losses.

This won’t necessarily help if the bank’s entire system was hacked. But if you can show you’re not negligent and have taken appropriate security precautions, banks will be more likely to take financial responsibility and cover your losses.

Some good habits:

• Use strong passwords and change them frequently.
• Only use secure networks for online banking.
• Always set a strong security question / answer when you send e-transfers.
• Don’t share any banking information or passwords – follow the terms of the banking agreement you signed.
• Don’t use debit cards online or give out your number over the phone.