All About Chequing Accounts

Learn about your chequing account options.

What is a chequing account?

A chequing account (also known as a checking account) is a secure way for you to access your money without having to walk around with wads of cash. Linked to your debit card, chequing accounts facilitate day-to-day transactions including making in-store purchases and withdrawing cash.

  • Almost every financial institution in Canada offers a basic chequing account.
  • By using a personal chequing account, you can conveniently keep track of all your expenses as it is linked to a debit card.
  • You can also track any earnings you make throughout the month, as recurring deposits like pay cheques can be easily linked to a chequing account.
  • Having a chequing account allows you to safely manage your most liquid asset- your hard-earned money!

Deposits up to $100,000 are protected by the Canada Deposit Insurance Corporation (CDIC)

What can I use a chequing account for?

You can use your chequing account for multiple banking needs, from sending your landlord your rent via Interac to buying souvenirs in France.

The most common uses of a chequing account are:

  • Withdrawing cash from an ATM
  • Making purchases in a store using your debit card
  • Depositing a paycheque
  • Sending an email money transfer through Interac e-Transfer
  • Handling recurring pre-authorized payments, like a phone bill or gym membership

Other less common, but equally important features a chequing account can provide are:

  • Certified cheques, bank drafts and money orders
  • Travellers’ cheques
  • Cheques involving foreign currency
  • Stop-payment of a cheque or pre-authorized debit
  • Wire transfers (Domestic and International)

What are chequing accounts not used for?

Chequing accounts have a high level of liquidity because they are meant for everyday transactions. If you’re looking to accrue interest on money that’s sitting in a chequing account, you simply won’t! Most financial institutions don’t allow you to accrue interest through your chequing account, and if they do it is rarely more than 0.05%.

If you have a large sum of money in your chequing account, you should consider transferring it to a high-interest savings account, TFSA, GIC or an RRSP. All of these offer significantly higher returns than the meagre interest offered by a chequing account.

What is the difference between a chequing account and a savings account?

Learn the main differences between a chequing account and savings account to see which one suits your overall money management needs.

Chequing account Savings account
Purpose Designed for your everyday transactions like grocery and gas purchases. Designed for long term saving goals like purchasing a home, saving up for tuition, etc.
Features Convenient way to manage your money for your daily needs like bill payments, food purchases. Great way to accrue interest on your savings, maximizing the worth of your dollar. Several banks offer better interest rates depending on the amount of money you’ve kept in your savings account. The higher the amount, the better the interest rate.
Comes with a linked debit card that allows you to easily access your chequing account balance and go cashless. Great way to safely save up for big purchases, due to the limited amount of withdrawals, you won’t be tempted to spend from your savings account.
You get access to cheques. You can withdraw funds quickly for emergencies – vs. some other investment types which can take longer to access (Mutual fund might take a day or two).
Drawbacks You won't be able to accrue any significant interest. Most savings accounts don’t come with cheques.
You may have to pay a small fee for multiple transactions. You may have limits to how much money you can withdraw.
Most savings accounts don't come with a debit card, meaning you’ll have to transfer the required funds to a chequing account first.

Are all chequing accounts the same?

All chequing accounts help you complete your day-to-day transactions. However, this does not mean that all chequing accounts are the same. Each chequing account comes with its own set of features and fees, which cater to the needs of different groups of people.

For example, a student chequing account usually has a zero-dollar banking fee, while a chequing account for somebody working full-time usually has a monthly banking fee based their banking needs.

Frequently asked questions about chequing accounts

There are chequing accounts designed for a variety of everyday spending needs and lifestyles.
Find answers to the most common questions regarding personal banking!

Do chequing accounts have monthly fees?

If you’re unsure about which chequing account suits your personal banking needs, evaluating the monthly fee is a great option.

Every financial institution has a monthly chequing account fee for helping you carry out your day-to-day transactions. This fee depends on your average chequing account balance and the number of transactions you may carry out during the month. The average monthly chequing account fee is $15.

But don’t worry! This fee can be waived if you meet certain conditions like having a relatively high account balance. It is also important to note that if you fail to meet the account balance minimum, you will be charged the monthly fee.

However, many financial institutions also offer a zero-minimum balance chequing account. Smaller financial institutions can sometimes offer a zero-minimum balance chequing account to a larger number of people because they have lower running costs than a large financial institution. If you’re looking for such an account, don’t be afraid to consider small financial institutions.

Does a chequing account allow unlimited transactions?

Not all chequing accounts allow unlimited transactions. Depending on the account, you will be allowed a certain number of free transactions each month. If you go over that limit, expect a charge for each additional transaction.

Some chequing accounts do not limit the number of transactions you can make. These are known as unlimited chequing accounts.

What kind of chequing accounts can I choose from?

When it comes to choosing a chequing account, you are spoiled for choice! Several financial institutions offer a range of chequing accounts.

Some of the most common chequing account options you’ll find are:

  • Student chequing accounts
  • Youth chequing accounts
  • Seniors chequing accounts
  • No minimum balance chequing accounts
  • Unlimited transactions chequing account

What other fees can a chequing account have?

Apart from the monthly fees, a chequing account can have other fees that you must consider.

  • The most common is an ATM withdrawal fee. If you withdraw money from your bank’s ATM, you won’t be charged a fee. But if it is another bank’s ATM, you may be charged a small fee, ranging from $1.50 to $3.
  • If you’re travelling abroad, expect to be charged a higher ATM withdrawal fee. Sometimes, you can avoid the additional exchange rate fee by using an international debit card.
  • Your financial institution can also charge you for cheque books, additional debit cards, overdraft fees etc.
  • You may also be charged for wire transfers or e-transfers, depending on the frequency and amount of your transfer.

How much will the bank charge in the event of overspending?

When it comes to chequing accounts and overspending, you have to be quite careful! Do not confuse your chequing account with a line of credit. If you don’t have any overdraft protection, your financial institution can charge you a daily fee if your balance becomes negative.

Similarly, if you write a cheque, without having money to cover it, the cheque will bounce! Once a cheque bounces you will be charged a non-sufficient funds fee or most commonly known as an NSF fee.

Why should I consider changing chequing accounts?

As you move on to different phases in your life, your banking needs also change. The chequing account you had as a child or student might not meet your needs as you enter new life milestones.

As you move on to bigger things, like getting a mortgage or buying a car, your day-to-day banking needs will also change. You will have to become smarter with your money management skills. A new and better suited chequing account can facilitate that change by offering you services and features that fit your lifestyle and future goals.

For example, let’s say your monthly chequing account fee is $15.95 per month. That means every year you’re paying $191.40 in personal banking fees.

Now that you know what to look for in a chequing account, find the best deal on Rates.ca. Compare chequing accounts today and find one that suits your personal banking needs!

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