The primary differences between chequing and savings accounts are that chequing accounts are designed for day-to-day transactions, offering a higher number of monthly transactions, while savings accounts earn interest, so they’re better when you want to hold on to your money long-term (aka, save).
We’re looking at the difference between the accounts to help you determine which one meets your financial needs. But the bottom line is, most people benefit from having a savings and a chequing account.
Key Takeaways
- A chequing account is best for everyday transactions.
- Chequing accounts allow you more transactions per month and you have more flexibility in how you spend your money.
- Savings accounts are meant to hold your money, and if they earn interest, your savings can grow.
- Savings accounts often don’t require you to pay a monthly fee.
- Having both a chequing and a savings account makes it easier to manage your money.
Chequing vs. savings accounts
A chequing account is meant to be used for day-to-day transactions like depositing cheques or paying bills, while a savings account is designed to hold money that you’ve set aside for your savings goals. But is there really a difference in the accounts?
Actually, yes – chequing accounts and savings accounts are structured differently. Here’s the breakdown:
| Chequing account | Savings account | |
|---|---|---|
| Interest | Usually earns low or no interest | Often earns interest, although you may have to maintain a minimum balance |
| Fees | May have a monthly fee | Typically no fees if you meet your minimum balance |
| Transactions | Higher or unlimited number of deposits and withdrawals each month | May be charged a fee if you go over a limited number of withdrawals each month |
| Access to funds | Can withdraw money with debit card or cheque, at an ABM, or by seeing a bank teller | May need to visit a bank or transfer the funds before you can use them |
Now, let’s dig a little further into how each account works.
What is a chequing account and why should I have one?
A chequing account is a basic, day-to-day bank account. You can use it to deposit cash, cheques, and paycheques. Chequing accounts are commonly used to pay for things like:
- Bills
- Groceries
- One-time purchases
- Recurring payments
- Interac e-Transfer® transactions
Pros: One of the main benefits of a chequing account is that you have a higher limit on the number of deposits and withdrawals you can use each month. Some chequing accounts even allow for an unlimited number of transactions. You also have more flexibility in how you perform these transactions, from debit cards and cheques to online wire transfers.
Cons: Many chequing accounts include a monthly maintenance fee, although this may be waived if you make a certain number of deposits or maintain a certain average balance each month. And you usually won’t earn interest (or only a small amount) on the money you keep in a chequing amount.
What is a savings account and why should I have one?
Savings accounts are a great way to set money aside. Using a savings account can help you reach your savings goals, including:
- Going on vacation
- Buying a car
- Putting a down payment on a house
- Having a fund for emergencies
Pros: Many savings accounts earn interest, although depending on the type of account you choose, you may need to maintain a minimum monthly balance first. And most savings accounts don’t require a monthly maintenance fee, but in some cases a minimum balance is required for the account to be fee-free.
Cons: You may only be allowed a limited number of transactions with a chequing account, and you might be charged a fee for each additional transaction after you reach that.
Should I have a chequing or a savings account?
If possible, it’s best to have both a chequing account and a savings account. Use your chequing account for everyday purchases like paying bills or buying groceries, and set aside additional money in your savings account.
Having a chequing and a savings account can make it easier for you to keep track of your transactions – and it may make saving easier than if you leave extra money in your chequing account.
Pro tip: Open your chequing and savings accounts with the same bank – this may make it easier to transfer funds from one account to the other using your banking app.
How much money should I keep in each account?
Chequing: As a guideline for the amount to keep in your chequing account, maintain a high enough balance to cover your monthly expenses, a cushion to avoid overdrafts and unexpected expenses, and enough to meet your account’s minimum balance requirement.
Savings: Keep three months’ worth of expenses in your savings account with the goal of building it up to 6 to 12 months’ worth. In addition to this emergency fund, use your savings account to set aside money for your specific savings goals.
Top Chequing Accounts
These are our top three picks if you’re opening a new chequing account in Canada:
Scotiabank Ultimate Package
Why we like it: You can earn a generous welcome bonus by enrolling in the Scotiabank Ultimate Package chequing account. You also get free cheques and ABM transactions, no overdraft fees, waived fees if you enroll in certain Scotiabank credit cards, and Scene+ rewards. It does have a steep monthly fee of $30.95, but that’s waived with a minimum balance of $6,000.
Learn more about the Scotiabank Ultimate Package here
Simplii No Fee Chequing Account
Why we like it: The Simplii No Fee Chequing Account is a great option if you don’t want to pay a monthly fee, and CIBC-owned Simplii is a bank you can count on. And with unlimited transactions and conveniently-located ABMs, this account has plenty of flexibility. And the welcome bonus is a very enticing cherry on top.
Learn more about the Simplii No Fee Chequing Account here
BMO Performance Chequing Account
Why we like it: The BMO Performance Chequing Account includes unlimited transactions and Interac e-Transfers each month. They also offer discount rates for new students and minors, making it easy to form good money habits early. There’s a monthly fee of $17.95, but that’s waived if your minimum monthly balance reaches at least $4,000.
Learn more about the BMO Performance Chequing Account here
Top Savings Accounts
Here are the top three options if you’re looking for a new savings account in Canada:
KOHO Earn Interest
Why we like it: KOHO’s savings account comes with an impressive 5% interest rate (with no minimum balance requirement), making it easy to watch your savings grow quickly. You won’t pay any transaction fees, and KOHO’s mobile app is packed with helpful features.
Learn more about the KOHO Earn Interest Savings Account here
Scotiabank MomentumPLUS Savings Account
Why we like it: Scotiabank’s MomentumPLUS Savings Account makes it easy to set and meet your goals, with tiered interest rates that go up the more you save. You can also earn a bonus if you set a savings goal and don’t make a withdrawal during that amount of time.
Learn more about the Scotiabank MomentumPlus Savings Account here
EQ Bank Personal Account
Why we like it: The EQ Bank Personal Account is a simple, no-fee savings account. There’s no monthly transaction limit, and you can earn up to 3.5% interest, depending on the amount that you have saved.
Learn more about the EQ Bank Personal Savings Account here
FAQ
What is the difference between chequing and savings accounts?
A chequing account is an account that allows a high number of monthly transactions. It’s used for day-to-day transactions like depositing your paycheque and paying bills. A savings account earns interest and helps your money grow over time.
Is it better to have a cheque or savings account?
If you’re only going to have one account, a chequing account probably has better utility. But having both a chequing and a savings account can make it easier for you to track your spending and meet your savings goals.
What is the 50-30-20 rule?
The 50-30-20 rule is a theory that states that you should use 50% of your income for regular monthly transactions like bills and groceries, 30% for additional one-time expenses like clothing or home repairs. The remaining 20% should go to savings or paying off debt.
Is it better to leave money in checking or savings?
If you’re not planning to spend the money for a while, putting it into a savings account can be a good way to earn interest on the money you already have.
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