Chequing vs savings: Compare different types of bank accounts in Canada
Learn how to choose between 11 types of bank accounts, including chequing vs savings accounts.
Choosing a bank account can be confusing. What’s the difference between chequing vs savings accounts? Is there a better type of bank account? What bank account is right for me?
This guide explains the critical differences between primary bank account types and the best way to use each type of account. Finally, we’ll help you answer the ultimate question: Which type of bank account is best for your needs?
Common types of bank accounts in Canada
In its most basic form, there are only two types of bank accounts in Canada: a chequing account and a savings account. But why two? What’s the difference between a chequing account and a savings account?
A chequing account is designed for daily banking needs — depositing your paycheque, paying bills, buying groceries, etc. A savings account is designed to let you earn interest on every dollar deposited into your bank account — helping you save more.
In recent years the arrival of digital banks and fintech apps meant hybrid bank accounts, making the decision between opening a chequing vs savings account far more challenging.
To help, here’s a breakdown of the 11 types of bank accounts found in Canada, along with an explanation of when to use this type of account:
Bank accounts at a glance
- Chequing accounts
- Savings accounts
- High-interest savings accounts
- Online bank accounts
- Money accounts or money apps
- Seniors’ bank accounts
- Kids’ banking
- Student bank accounts
- Registered accounts
- Joint accounts
- Business bank accounts
Chequing accounts are for your day-to-day banking needs. They provide fast and easy access to your money via online and mobile banking, plus a linked debit card for your daily spending.
You can use a chequing account to:
- Deposit paycheques, e-transfers and cash
- Pay bills
- Send Interac e-transfers
- Withdraw money at an ATM or branch
- Write cheques
- Shop using a linked debit card
You can also find variations on the chequing account. For instance, you can open an individual or joint chequing account, while US dollar and business chequing accounts are also available. Many chequing accounts charge a monthly fee — although you can find no-fee chequing accounts. In some cases, the monthly fee is waived if you meet certain criteria, such as a minimum account balance or multiple products with the same bank.
In most cases, a chequing account allows you to perform unlimited or a large number of monthly transactions — assuming you will do your day-to-day banking through this type of account. Keep in mind that if you exceed your account’s monthly limit, any further transactions you make will attract additional fees.
Find the best day-to-day banking account for your needs using the Finder guide to the best chequing accounts.
A savings account is designed to help you save money. It lets you earn interest on the money you deposit into your account, allowing your bank balance to grow as you save. You can further boost your savings by setting up a regular automatic deposit from your chequing account.
Because this type of account is not intended for daily spending, typical savings accounts often don’t include features like ATM access or unlimited monthly transactions. In most cases, this type of bank account does not charge you a monthly fee. Like chequing accounts, expect to pay transaction fees if you use your savings account to complete certain banking transactions, such as bill payments or e-Transfers, and, in most cases, these transactions are not included in the monthly account package.
Find out more through the Finder guide to savings accounts.
High-interest savings accounts
High-interest savings accounts are like savings accounts on steroids. They offer higher interest rates than standard savings accounts, allowing you to grow your balance faster. To get these higher rates, you will need to forego some features or meet a requirement, for instance:
- Keep a minimum account balance to get a higher interest rate
- Special high-interest rate is for an introductory period, such as 3 to 6 months, and once the intro period ends, you earn at a lower interest rate
- No withdrawals each month
- Add multiple products with the same financial institution
The best high-interest savings accounts don’t have any monthly fees and can be linked to your chequing account for regular deposits. Just watch out for any transaction limits or additional transaction fees that may apply.
To learn more about these types of savings accounts, check out our guide to the best high-interest savings accounts.
Online bank accounts
Basically, every bank in Canada allows you to manage your account through an online web portal or a mobile banking app. But digital banks take it a step further and operate completely online. That’s right: Digital banks don’t have physical branches. So, when you want to open an account, manage your money or get customer support, you need to chat online, go through a smartphone app, call customer service or go online to their banking portal. The advantage is that most online banks offer low or no fees, and you can do your banking whenever convenient.
Online banks tend to offer flexible banking options and may sometimes partner with brick-and-mortar banks to offer services — like ATM access — that would otherwise be difficult to provide.
While they don’t offer the same broad range of products as traditional banks, many online banks offer:
- Chequing accounts
- Savings accounts
- USD accounts
- Credit cards
- Prepaid cards
- Student bank accounts
- TFSAs and RRSPs
And, like traditional banks, many online banks like EQ Bank, Tangerine and Simplii Financial are CDIC insured for up to $100,000 per account, so your savings are protected in the unlikely event of a bank failure (check to see if any bank you’re interested in is CDIC insured).
Just make sure the digital bank you choose has a reputation for great customer support so that if you ever need help, it’ll always be within easy reach.
Find out more about online banks and digital banking in Canada
Money accounts or money apps
Traditionally, you would have to log into a computer at home or in your office or visit a branch to complete a banking transaction. However, with the introduction of digital banking, mobile banking has become faster and easier. Using online money accounts and mobile apps gives you the convenient option to manage money while on the go.
For example, Mydoh is an app designed to teach kids about managing money. It allows parents to pay their children’s allowance and monitor spending, while kids can use a prepaid card linked to their accounts to pay for purchases. To learn more about banking services to help kids manage money, check out the Finder guide on kids’ banking.
Neo Financial offers the Neo Money Account, which combines interest-earning potential with cash back on purchases and doesn’t charge monthly fees.
Seniors’ bank accounts
Once you turn 60 or 65 — and sometimes as early as 55 — you qualify for seniors’ discounts and seniors’ banking packages at most banks. These packages offer a variety of perks, including:
- No monthly fee (or a discount off the monthly account fee)
- Welcome bonuses
- Discounts off other banking products and services (such as credit card annual fee rebates)
- Free personalized cheques
These discounts and benefits usually apply to chequing accounts, but some banks also offer savings accounts with perks for senior clients. Just watch for eligibility criteria. For instance, you must receive Old Age Security (OAS) or the Guaranteed Income Supplement (GIS) and be a new banking customer.
Find out more about the best bank accounts for seniors discounts
Kids’ banking and bank accounts for teens
If you’re looking for the best bank account for kids — or teens under the age of majority — you’re in luck. In Canada, there are plenty of kids’ banking options, such as chequing and savings accounts for children and money management apps designed to help improve your child’s financial literacy. Some are also joint accounts so parents can monitor a child’s spending.
Chequing accounts for kids usually offer fewer features than similar day-to-day bank accounts for adults. However, most kids’ chequing accounts still allow your child to make debit card purchases, ATM withdrawals and digital transactions. Most kids’ chequing accounts do not charge monthly fees.
Most kids’ savings accounts pay a modest interest rate on every dollar in the account. The lower interest rate is because kids’ accounts are designed to teach kids how to save towards a goal and typically don’t have monthly fees.
Other options include online money apps, such as Mydoh, that let your kids learn about digital spending and online transactions, allowing parents to connect chores or work with allowance or pay.
Find out more about the best bank accounts for kids
Student bank accounts
Student bank accounts are a common offering from banks looking to secure young people as long-term customers.
As most students are on a tight budget, student bank accounts come with low or no fees. They’re designed to be used for daily banking tasks like in-store purchases, ATM withdrawals, getting paid and paying bills.
Student bank accounts are great for learning how to manage your money and often offer budgeting tools and spending trackers to help monitor your account. Some accounts also have added perks, such as welcome cash bonuses and discounts at partner retailers.
Just make sure you check the terms and conditions before applying, as you may need to be a full-time student under a certain age to qualify.
Find out more about the best bank in Canada for students
Registered accounts are investment accounts that are registered with the federal government. Designed for long-term savings and investments, they offer tax benefits to account holders, allowing you to grow your savings tax-free or defer tax until later.
Types of registered accounts in Canada include:
- Tax-free savings account (TFSA). A TFSA allows you to contribute up to $6,500 a year to save and invest, with no tax payable on interest or income earned. (Keep in mind, contribution limits can change from year to year.)
- Registered retirement savings plan (RRSP). An RRSP allows you to save and invest for your retirement while reducing your taxable income. The tax owed on the money invested in an RRSP is deferred until you withdraw funds from the plan (typically when you are in a lower income-tax bracket).
- Registered education savings plan (RESP). An RESP lets you invest after-tax dollars into a registered account that can be used to help fund your child’s post-secondary education. While there are no immediate tax benefits to investing in an RESP, contributions are eligible for government matching grants — and you won’t have to pay the tax earned on the growth of the investments until the money is withdrawn (in your child’s name and, assuming the child is in a lower income-tax bracket, you end up paying less income tax.)
- Registered disability savings plan (RDSP). An RDSP helps you save for someone who is eligible for the disability tax credit (DTC). You also won’t pay tax on the investment income earned and contributions are eligible for government matching grants.
It’s also possible to hold guaranteed investment certificates (GICs) in registered accounts, such as TFSAs and RRSPs. But non-registered GICs are also available. Check out the Finder guide on GICs for more information.
Joint bank accounts
If you’re comparing the pros and cons of a chequing vs savings account, you may also want to consider opening a joint bank account. Joint bank accounts are held by two or more people — usually couples, but also family members and business partners.
For couples, a joint chequing account makes pooling your finances and managing your day-to-day spending easier. This can help with budgeting, while it also means you only pay fees on one account instead of two separate accounts.
A joint savings account can help you work together to reach a savings goal, such as saving a house deposit. Just remember that you’ll need to completely trust the other account holder(s), as you are putting your finances at risk.
Find out more about how to open a joint bank account in Canada
Business bank accounts
There are two main categories of business bank accounts: business chequing accounts and business savings accounts.
Like a personal chequing account, a business chequing account helps business owners manage their day-to-day banking — paying suppliers, receiving customer payments, and managing cash flow. They often come with monthly fees.
Business savings accounts let you boost your savings by earning passive income. They typically don’t have monthly fees, but transaction fees may apply.
Business bank accounts also allow you to separate your business and personal finances, which makes it easier to track your business spending and manage your tax obligations.
Find out more about business bank accounts
Chequing vs savings accounts
What’s the difference between chequing and savings accounts? Both are used to keep your money safe, but one is better for spending while the other is better for saving.
A chequing account is designed for everyday spending. It comes with a debit card and gives you convenient access to your money to pay bills, withdraw cash, transfer funds and deposit money. On the other hand, a savings account provides a safe place to store your money for later use while allowing you to earn interest and grow a bigger balance.
How to compare chequing vs. savings accounts
To find out if you need a chequing account or a savings account, think about what features you may need. Here’s a simple list to consider:
- Interest rates. Most chequing accounts don’t pay interest, while you could earn 2% or more with the right savings account.
- Deposit requirements. Initial deposit requirements vary depending on whether you choose a savings or chequing account, but most are zero. Some chequing accounts will also waive their monthly fees if you meet minimum balance requirements.
- Features. Chequing accounts often have more features, such as overdraft protection and cashback on purchases.
- Fees. Chequing accounts are more likely to have monthly fees, but you should watch out for additional transaction charges no matter whether you choose a chequing account or savings account.
- Access. Chequing accounts give you more access to your money so you can take care of day-to-day transactions, but if you’re looking for an incentive to save, savings accounts sometimes have transaction limits to discourage spending your hard-earned dollars.
- Security. Both types of bank accounts are eligible for CDIC deposit insurance, but only if the issuing bank is a CDIC member institution.
What’s the difference between chequing and savings accounts?
|Cheque writing||Yes||Rarely — varies by bank|
|ATM access||Yes||Varies by bank|
|CDIC insurance||Yes, up to $100,000 per account||Yes, , up to $100,000 per account|
|Minimum deposit or balance required||Varies widely, typically starts at $0||Varies widely, typically starts at $0|
|Withdrawal restrictions||Typically none, but daily or weekly limits depend on banking plan||Depends on banking plan and type of account|
Should I open a chequing or savings account?
Chequing vs savings account: which should you open? The best answer depends on your needs. A chequing account is the way to go if you want regular access to your money for everyday spending. But if you’re saving for a particular goal or you just want to park your money somewhere it’ll earn interest, consider a savings account.
Pick a chequing account if …
- You need unrestricted access to your money
- You plan on making multiple transactions per month
- You want features like overdraft protection
Pick a savings account if …
- You don’t need easy access to your money
- You’re looking to save money and earn interest
- You want to limit your spending
Chequing vs savings account: Should I open both types of bank accounts?
Having both a chequing account and a savings account could help you manage your money and save better. Your chequing account provides flexible access to cover expenses, bills and more, and you can transfer any extra money to your savings account to earn interest. Plus, some banks allow you to set up overdraft protection that uses funds from your savings account to cover chequing transactions.
Should I open a chequing account and savings account at the same bank?
It depends. One of the benefits of keeping your accounts at the same bank is that many institutions will waive monthly fees or provide free overdraft protection for your linked accounts. Plus, it’s easy to transfer funds between accounts almost instantly. But this can work against you if you’re tempted to dip into your savings and spend the money on other things. If you prefer to keep your savings “out of sight, out of mind,” you may be better off keeping both accounts at separate institutions.
Compare chequing vs. savings accounts
Use the tabs on the table to explore chequing and savings accounts. To compare multiple accounts side-by-side, click the “Compare” box next to your top picks for an alternative view.
How to choose the right type of bank account for your needs? Answer these 7 questions
Everyone has different banking needs, so there’s no such thing as a single best bank account. The best bank account for you will depend on how you use the account and what features you require. That’s why you should ask yourself the following questions:
- What will I use the account for? Is it for day-to-day use, to earn interest on my savings, to get rewards like cash back on purchases, or for some other purpose?
- How many transactions will I make per month? Do you bank frequently and need an account that supports unlimited transactions, or are you just looking for something that allows you to perform minimal banking tasks?
- Am I willing to pay a monthly fee? If so, do the included features justify the fee? Or am I looking for a fee-free bank account?
- How will I do my banking? Am I comfortable managing my money via online and mobile banking, or would I also like to have the option of in-branch transactions? Are all the types of transactions I want to perform included as part of the account? Does the bank have a large ATM network?
- Do I need any special features? For example, does the account come with free personalized cheques? Does it have low overseas transaction and ATM withdrawal fees? Do I need overdraft protection in case I forget to pay a bill or a payment comes out earlier than expected.
- Does the account come with any perks? For example, can I get discounts on other products like credit cards and safety deposit boxes?
- How will I access customer support? Is customer service available in a branch, over the phone, or via live chat and email? Can I access support at a time that’s convenient for me? Is there 24/7 support?
How banking works in Canada
Every Canadian has the right to open a bank account, even if you don’t have a job or you don’t have any money to deposit into the account immediately.
The banking sector in Canada is also highly competitive. Not only do you have the option to open an account with the “Big Six Banks” — RBC, TD Bank, Scotiabank, BMO, CIBC and National Bank — but also with a wide range of other smaller Canadian banks, international banks, credit unions and online financial institutions.
This competition between banks is good news for you, the customer. With so many financial institutions competing to increase their market share, the result is better deals for you — lower fees, higher savings account interest rates and more added perks. So whether you’re opening a chequing or savings account, it’s important to shop around and compare a wide range of options.
If you can do that, you’ll find the best bank account for your needs.
FAQs — Types of bank accounts
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