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Compare interest-earning chequing accounts

Enjoy a small boost to your balance while making everyday transactions.

Most chequing accounts are designed to separate your more fluid cash from long-term savings. Although rarely offered, an interest-earning chequing account (also known as a hybrid account) sweetens your money management with a rate that allows you to earn interest along with that easy access.

How does an interest-earning chequing account work?

An interest-earning chequing account allows you to earn interest on your chequing account balance while still allowing you to regularly access your funds, use ATMs, pay bills and do everything you would normally do with a regular chequing account. But the interest rate is typically at a lower rate than you’ll find with a savings account. Because the rate is lower, it won’t replace traditional or high-yield savings, but a little growth each month can’t hurt.

Interest-earning chequing accounts aren’t usually offered by the major banks but they do exist. Read the fine print of your account’s terms and conditions for minimum deposits or balances required to trigger the interest rate.

How can I compare interest-earning chequing accounts?

First assess what your needs are, the type of transactions you tend to make and how often you deposit money in your account. High-yield chequing accounts often come with low ongoing fees. To make sure you’re getting the best deal you’re eligible for, weigh the interest rate against ATM, debit and other transaction fees that can eat into your ability to earn interest.

Competitive features designed to keep more of your money away from fees and reward you for your loyalty include:

  • No monthly fees. Look for ways to avoid advertised maintenance fees, including committing to regular direct deposits or autopay requirements.
  • Low or no monthly deposits. Some accounts require a minimum monthly deposit to earn interest or avoid fees.
  • No ATM fees. Competitive banks offer free out-of-network withdrawals and even reimburse you for fees you’re charged by third-party operators.
  • Convenient banking. If you like banking on the go, look for a robust banking app that allows you to manage your balance from your phone and an easy to use online banking portal. Find a network of brick-and-mortar branches if you prefer in-person support.
  • Low minimum opening balance. Look beyond banks requiring minimums that are more than you have to save.
  • Competitive interest rates. Get the most out of your interest rate by learning whether interest payouts align with your paycheques — you’ll want it calculated against your highest balance between constant withdrawals and deposits.
  • Rewards and perks. Many banks entice customers with cash back, miles or other rewards with your debit card.
  • No foreign transaction fees. Frequent travellers will appreciate straightforward spending overseas and on foreign websites.

What are the pros and cons of interest-earning chequing accounts?

Pros

  • Interest on your balance. Earning money with little effort is a plus, especially when most chequing accounts don’t offer it.
  • Easy access to your money. Set aside the funds you need to pay regular bills and funnel anything that’s left to your long-term savings account.
  • CDIC protection. Your balance of up to $100,000 is protected against the financial institution’s collapse or failure.

Cons

  • Low interest rates. Interest rates are often lower than your typical savings options, so don’t expect to rely on these accounts for long-term savings.
  • Minimums required. Some banks may require you to maintain a minimum balance in the account. If you can’t maintain at least the minimum, you may end up paying an assortment of fees, or find you’re excluded from earning the interest you sign up for.

Bottom line

An interest-earning chequing account can earn you a little extra on your balance intended for regular, everyday payments. But it doesn’t replace a savings account for long-term savings.

To keep your nest egg safe, compare savings accounts to find the highest interest rate you’re eligible for.

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