Chequing account Canada and savings account Canada are two of the most common banking products Canadians use. Understanding the differences in a clear "chequing vs savings" comparison helps you pick the right account for daily spending, emergency funds, and short-term goals.
Quick overview: what each account is for
Chequing account: Designed for everyday transactions — deposits, bill payments, debit purchases, pre-authorized payments and ATM withdrawals. Think: day-to-day money flow.
Savings account: Built to hold money you don't need immediately and to earn interest. Think: short-term goals and rainy-day funds.
Key features compared
Accessibility
Chequing: Immediate access via debit, Interac e-Transfer, pre-authorized payments and cheques.
Savings: Access may be through transfers to a chequing account or withdrawals; some accounts limit transactions.
Interest
Chequing: Usually little to no interest.
Savings: Pays interest — the rate varies widely between mainstream banks, online banks and promotional accounts.
Fees
Chequing: Monthly fees are common; some accounts waive fees with minimum monthly activity or balance.
Savings: Often lower fees; many basic savings accounts have no monthly fee but watch for transfer limits or withdrawal fees.
Purpose
Chequing: Cash flow and bills.
Savings: Build emergency fund, save for short-term purchases, accumulate interest.
When to use each (simple rules)
Use a chequing account when:
You need fast access for daily purchases, bill payments and direct deposits.
You want a debit card, cheques or pre-authorized payment capabilities.
Use a savings account when:
You're building an emergency fund or saving for a short-term goal (vacation, down payment).
You want to earn interest and don't need immediate, daily access.
Step-by-step: How to open the right account
Compare account types at banks, credit unions and online banks.
Check fees and features: monthly fee, free transactions, Interac e-Transfer limits, ATM access.
Confirm interest rates for savings; note whether the rate is promotional and how long it lasts.
Verify deposit protection (CDIC coverage) for the financial institution and product.
Apply in-branch, online or by phone — you'll need ID (e.g., driver's licence, passport, SIN for tax reporting).
Set up direct deposit and Bill payments once the account is funded.
Fees, overdraft and account limits — what to watch for
Monthly maintenance fees: Many chequing accounts charge a fee unless you meet balance or transaction requirements.
Transaction limits: Some savings accounts limit the number of free withdrawals or transfers.
Overdraft protection/fees: Overdrafts on chequing accounts can trigger high fees or interest; consider linking a savings account or a line of credit.
ATM fees: Using out-of-network ATMs can add charges; look for fee rebates.
Interest and tax considerations
Interest earned on savings accounts is taxable and must be reported on your tax return. See the CRA guidance on reporting interest and investment income at CRA: Interest and Other Investment Income.
Registered alternatives: If you want tax advantages, consider a TFSA (Tax-Free Savings Account) or RRSP for longer-term savings or investing. Interest in a TFSA is tax-free; in an RRSP it's tax-deferred.
Which account should Canadians choose? Practical scenarios
Student or new earner: Basic chequing account with low or no monthly fee; small savings account for short-term emergency savings.
Two-paycheque household: Chequing for bills; high-interest savings for emergency fund holding 3–6 months of expenses.
Saving for a down payment: Use a high-interest savings account or a TFSA for better interest and flexibility (watch CMHC/ mortgage rules if saving for a home).
Frequent traveller: Chequing account with low foreign transaction fees and a bank that rebates ATM fees.
Tips to get the best value
Shop online: Online banks often offer higher savings rates and lower fees.
Bundle accounts: Banks sometimes waive chequing fees when you have multiple products or minimum balances.
Watch promotional rates: Understand term and renewal rates for high-interest offers.
Use account comparison tools and read the fine print on fees and limits.
Quick checklist before you apply
- ID ready: Government-issued photo ID and SIN (if required).
- Fee structure: Monthly fee, transaction fees, ATM charges.
- Access needs: Interac e-Transfer limits, debit card, cheques.
- Interest rate details: Regular vs promotional, compounding frequency.
- Deposit protection: Confirm CDIC coverage for eligible products.
Useful Canadian resources
Financial Consumer Agency of Canada (FCAC) — Banking products and services — compare accounts and consumer protection info.
Canada Deposit Insurance Corporation (CDIC) — What's insured — find out how deposits are protected.
CRA: Interest and Other Investment Income — tax rules for interest income.
Frequently asked questions
Can I have multiple chequing and savings accounts?
Yes. Many Canadians keep at least one chequing for daily use and one or more savings accounts for specific goals.
Should I move savings to a GIC or TFSA?
For higher returns and longer timelines, consider GICs or a TFSA depending on your need for liquidity and tax preferences.
Are online bank savings accounts safe?
Online banks are usually CDIC members; verify coverage and the specific products that are insured.
Choosing between a chequing account and a savings account comes down to purpose: immediate access and payments (chequing) versus saving and earning interest (savings). Compare fees, access and protection, and consider TFSA or RRSP alternatives if tax efficiency matters.