Chequing Account vs Savings Account

To make the most of your personal finance tools, let’s break down the differences between the two most common ones: a chequing and a savings account.

Interest is the first major difference between chequing and savings accounts. One glance at our current savings account interest rates will tell you everything you need to know. A chequing account is purely transactional with no interest earned, while a savings bank account doesn't offer full transactional capabilities but accrues interest. 

So, which one should you choose?

What Is a Savings Account?

At the risk of being repetitive, a savings account is intended to save money. You earn interest on savings account deposits that provide a return on your funds.

While the interest rates can be modest, you’re still making extra money without having to do anything aside from making deposits.

Applying for a regular savings account isn't the only option to consider, however. You can learn more about Tax-Free Savings Accounts as well to see how they compare to traditional savings plans.

What Is a Chequing Account?

At a high level, you can look at a chequing account as your everyday deposit account. The Government of Canada explains it's intended to help you manage your daily banking. It provides access to your money when you need it through everyday banking transactions.

Enabling the use of paper cheques was a primary function of these accounts in the past. That's where the name comes from.

One of the biggest differences between a chequing bank account and a savings account is the number of transactions they allow:

• Chequing accounts can vary widely in terms of fees and transaction limits, depending on the financial institution. Our No-Fee Bank Account stands out by offering unlimited transactions with no penalties or fees. This makes it an excellent choice for managing the many deposits, debits, and withdrawals you may make each month, without worrying about extra charges.

• Savings accounts generally allow a limited number of transactions before charging penalties or fees. They are intended as a place to keep funds in the long term.

If you're making a payment and not using cash, a credit card, or a mobile payment service (i.e. Apple Pay), you'll probably use your chequing account.

• You might share your account details with businesses to make a bill payment e.g. to a utility company. 

• You might request a debit card for your chequing account to make payments or cash withdrawals from an ATM.

• You might sign up for online banking and use your account to send transfers or pay bills.

Chequing accounts, with a bank or credit union, that offers free transactions, are also useful for accepting deposits as you don't need to worry about paying a fee to receive your paycheque or other income.

Contact Our Specialists to Get the Best Option For You

Still having trouble deciding which bank account serves your purpose the best? You can contact our specialists who are happy to help you choose. Find a truly no-fee chequing account or the most competitive savings interest rate with a bit of help from our experts!

What Are the Differences?

Chequing accounts and savings accounts are both foundational parts of personal banking. Having both kinds of accounts can help you meet basic financial goals. That includes everything from paying bills to saving for the future.

When you see terms like “chequing vs savings accounts,” don't think of it as a debate. This isn't about which plan is better or more important. It's all about understanding the differences between chequing and savings accounts. That way, you can use both of them to their fullest potential.

To help you out, let's take a deeper dive into the question of chequing vs savings accounts in Canada. We'll look at what makes them similar and what sets them apart from each other. 

Monthly Fees

When it comes to the matter of chequing vs savings accounts, monthly fees are often the main indicator of the plan type. While a chequing account may come with monthly fees as a standard, it's not the same for a savings account. Savings accounts can usually be maintained without paying any monthly fees, as long as you're not trying to use them for everyday transactions.

Chequing account fees can vary depending on the financial institution, your daily activities, minimum monthly balance, and transaction amounts. However, not all chequing accounts charge fees. For example, our No-Fee Bank Account offers unlimited transactions with no fees, which makes it a smart and cost-effective choice for your everyday banking needs.

Interest Rates

Another clear difference between a chequing and a savings account is the interest rate paid on balances. You can think of a savings account as an investment account — your funds are safely stored and they accrue interest every month.

In contrast, most chequing accounts do not pay interest, as they are designed primarily for daily transactions and may involve monthly fees. While some high-interest chequing accounts exist, the rates are generally lower than those of savings accounts.

Debit Transactions

While you can use your savings account as an emergency fund, it’s important to note that free transactions may be limited. While withdrawing money or making transactions is straightforward, exceeding the transaction limit could result in additional fees. This is different from a chequing account, which is designed for frequent and unlimited transactions.

In contrast, chequing accounts are built for frequent transactions, which makes them ideal for daily spending and bill payments. While some accounts at other financial institutions may impose transaction limits or require higher-tier plans to enjoy unlimited withdrawals and transfers, that’s not the case with our No-Fee Bank Account. You’ll enjoy unlimited transactions, no monthly fees, and no tiered plans — regardless of your balance. It’s a simple, hassle-free way to manage your finances while enjoying the flexibility of a chequing account.

Chequing vs Savings Accounts: Benefits and Drawbacks

While each of these two accounts has its merits, it's best to stick with their intended purposes. You should use a chequing account for daily transactions like point-of-sale purchases using your debit card or paying your bills. Your savings account should mainly be used to grow your wealth. 

Here is a quick overview of the main pros and cons of each:

FAQs: Chequing vs Savings Accounts

How do I know if an account is chequing or savings?

When signing up for a new account, there shouldn't be any confusion. Every reputable financial institution will make it clear whether an account is chequing or savings. The same is true when accessing a current account through online banking, an ATM, or at a branch/advice centre.

Every plan has a unique account number. That makes it easy to steer money to its intended destination, even when making an in-person deposit.

When should I use a savings account?

Savings accounts are best used for occasional deposits and withdrawals. Many individuals and families keep their emergency funding in their savings accounts.

The money is kept outside of their chequing account. That helps to avoid confusion about its intended purpose and makes it much harder to use accidentally.

To make saving even easier, you can set up recurring transfers from your chequing account to your savings account. This allows you to automate your savings and helps you reach your financial goals effortlessly.

Ready to Get Started?

Hopefully, you now understand the debate of chequing vs savings accounts a bit better, so you can choose the best option for your needs. With our No-Fee Bank Account, you’ll enjoy unlimited transactions, no monthly fees, and a simple, hassle-free way to manage your daily finances. And because our savings and chequing accounts don’t charge monthly fees, why not open both online in minutes? 

We are always available to answer any additional questions you have. Reach out for more advice today!