What is a chequing account?
A chequing account is the most basic transactional bank account offered by banks, credit unions and small lenders. Chequing accounts are typically meant to serve as a transactions account. For example, most people have their paycheques from work deposited into a chequing account, then pay for purchases, services and their credit card bills with the money that's in there.
The money in your chequing account is usually your most liquid asset, as it can be withdrawn at anytime without penalty1 . In exchange for that liquidity, chequing accounts usually offer little-to-no deposit interest. In Canada, any amount you deposit up to $100,000 is protected by CDIC insurance.
What are the different types of chequing accounts
There are a number of different types of chequing accounts available to Canadians, each with a different intended purpose. A few different types of chequing accounts are:
Personal chequing accounts
Personal chequing accounts are designed to meet the diverse banking needs of any individual. These accounts can have monthly fees of between $0 and $30, depending on the transactions and services included in the account offering. Typically, the higher the monthly fee, the more services and transactions that are included in the account. Comparing personal chequing accounts will help you find the right account for your banking needs.
Student chequing accounts
Student chequing accounts are bank accounts designed to help post-secondary students save money on fees, for as long as they're in school. While each bank has its own specific requirements to open a student account, you will always need to be enrolled (usually full-time) in a post-secondary program at a recognized educational institution such as a university, community college, or CEGEP, to open an account. You must also be within a defined age range, typically 18-25 years old, though this can vary.
Youth chequing accounts
Youth chequing accounts are accounts designed for individuals under the age of majority in a province or territory. Typically, these accounts offer the functionality of a chequing account and the ability to earn interest on deposits similar to a savings account.
Senior chequing accounts
Seniors' chequing accounts are accounts designed for seniors. Some providers also offer senior discounts rather than a specialized account. These discounts are applied to the monthly fees of that provider's chequing account offering. Typically, the discount makes at least one account available to seniors at no cost and reduces other monthly account fees significantly.
Joint chequing account
Used primarily by married or common-law couples (but open to anyone), joint chequing accounts can be shared by two or more individuals at once. Each person on the account has equal access to the money in the account and make withdrawals and deposits as they see fit.
Business chequing account
Business chequing accounts are popular with small business owners and entrepreneurs. They work just like a personal chequing account, but are designed to keep money earmarked for business purposes.
U.S. dollar chequing account
For those who get paid in U.S. currency and spend a lot of time across the border, a U.S. dollar chequing account can keep their money without converting it to CDN, making it easy to access and use while in the United States.
What to consider when choosing the best chequing account?
Before you even start using our chequing account comparison tool, it's important that you identify your current banking habits and the number of transactions you know you'll make each month. Ask yourself these questions:
- How do you conduct your banking? Mostly online or in-person? If you know you'll need to go in-person, you may want to consider the bank's business hours (some are better than others). If you do mostly online banking, you may also be concerned about whether or not your lender has a mobile app.
- How often do you withdraw out cash from an ATM? If you do this regularly, you'll want to find a lender who has ATMs close to your home, office, etc.
- How many transactions do you make in a typical month? If you rarely use your chequing account, you could go with a basic chequing account. However, if you need an unlimited chequing account look into a no fee chequing account. Remember that if you got the basic account and performed more than the specified number of transactions it includes, you'd be charged for every transaction you go over.
Which features should you look for in a chequing account?
Once you have answered the questions above and identified your needs, different chequing account features will be more or less important.
Here are seven chequing account features to consider:
1. Included transactions
First, you’ll want to consider the total number and types of transactions included with the accounts you’re comparing.
Some chequing accounts offer unlimited transactions, while others impose limits, usually around 12 or 25 transactions per month. Exceeding these limits may results in additional fees, usually around $1.25 per additional transaction). The fees for additional transactions can add up quick, so if you plan to use your debit card for most of your everyday purchases, be aware of any associated limits or fees.
The types of transactions included can also vary depending on the account. Debit purchases and ATM withdrawals are considered generic transactions, while teller-assisted transactions done at a physical bank branch or over the phone may have separate limits.
In some cases, Interac e-transfers may also be considered a separate type of transaction with their own monthly limits and fees.
Typically, accounts with a greater variety and number of transactions included will have a higher monthly fee or require a higher minimum balance to waive the fee.Ideally, you’ll want an account that offers the most number of included transactions for the lowest monthly cost. There are several chequing accounts that provider unlimited debit transactions with no monthly fees, although most of these are offered by online-only banks that may have limitations such as fewer ATMs and additional fees for assisted transactions. Depending on your banking needs and habits, these limitations may or may not be dealbreakers.
2. Monthly fees
Depending on the chequing account and bank, there may be a monthly account fee.
For big banks, monthly fees typically range anywhere from $3.95 for basic bank accounts with limited transactions and few additional features, to over $30.95 for premium accounts that offer unlimited transactions and extra perks like free cheque books, money orders, and safety deposit boxes.
You’ll need to find the right balance between fees and the number of included transactions. Choosing a basic account just for the low $3.95 monthly fee may seem appealing, but if you make over 35 debit transactions on average per month, you'll exceed the allotted number of transactions and end up paying over $30 in total fees at the end of the month.
As we cover in the section below, you can have these monthly fees completely rebated by maintaining a certain minimum balance.
Additionally, there are online-only banks and challenger brands that do not charge any monthly account fees.
3. Fee rebates and minimum balance
As mentioned earlier, many chequing accounts have a monthly fee, particularly those offered by Canada’s big five banks. However, in most cases, you can have the fee fully rebated by maintaining a minimum balance.
For example, many premium accounts have a monthly fee around $30.95 that can be completely rebated as long as you maintain a minimum balance of at least $5,000. If your balance drops below the $5,000 minimum (even if it’s just by $1), the fee will be applied for that particular month.
If you have enough funds to meet the required minimum balance, you can enjoy the benefits of a premium accounts without any extra out-of-pocket expenses.
In some cases, you could also have the monthly account fee rebated if you have bundled multiple products with the provider (such as a mortgage or insurance product). You may also receive full or partial rebates on a chequing account if you’re a student or senior.
Instead of rebates, some providers may offer specialized accounts for youths, students or seniors that have no or low monthly fees. These accounts typically offer transactions that are of interest to certain groups of people, such as unlimited self-serve transactions for students or free paper statements for seniors.
4. ABM network and fees
Automated banking machines (ABMs) are by far the easiest way to deposit and withdraw cash. Using an ABM from your own bank won’t result in fees, as long as you’re not exceeding any monthly transaction limits imposed by your account, of course.
However, using an ABM that isn’t owned by your bank will cost you extra. To make things worse, fees are usually charged by both banks. For example, your bank may charge its own non-network fee while the bank the ABM belongs to will impose its own operator fee. Each provider usually charges around $1.50 to $2, so fees can add up to between $3 or $4 each time you use an ABM from a different bank. It’s worth noting, though, that some premium chequing accounts waive the non-network fee, so you would only owe $1.50 - $2.00 on one side of the transaction from the other bank.
When considering a chequing account, you’ll want to take into consideration the size of the ABM network and whether there’s an ABM within your neighbourhood.
In the case of chequing accounts from online-only banks, you usually have free access to ABMs under The Exchange Network, which represents a consolidated network of over 3,500 ABMs from dozens of digital banks and credit unions.
5. Other chequing account services
Apart from debit transactions, e-transfers, and ABM access, there are other features that may influence your choice of account. Consider services like requesting cheque books or money orders, opening a safety deposit box, and additional coverage in the form of overdraft protection.
Depending on the account, these services may have their own associated fee (e.g., cheque books can easily cost $50 each) or they may be included for free. Generally, the more premium account, the more likely these features will be built in as complementary features. It's something to consider.
On the topic of premium chequing accounts, virtually all of Canada’s big banks offer accounts that rebate the annual fee on one of their associated credit cards.
6. Interest and rewards
While still relatively niche, a handful of chequing accounts offer rewards in the form of interest on the account balance or points earned on debit transactions. The interest rate or points offered by these accounts usually pale in comparison to what you would earn from a high-interest savings account or rewards credit card. However, they still represent an added advantage that can help you earn a marginal amount of savings back every year. These rewards-like features, shouldn't be the sole basis for your account choice, but they can help narrow down your options between two otherwise very similar accounts.
7. Ways to bank
Having a chequing account that’s accessible through various devices or methods is another feature to consider. Typical banking options include: in-branch transactions, telephone, ABM, online banking, and mobile apps. Some online chequing account providers don’t have branches, so in-branch teller-assisted transactions aren’t available.
If you require teller assistance, make sure teller-assisted transactions are included in your plan. Depending on the provider, some also offer the ability to deposit cheques on your phone by taking a picture. To determine which chequing account is right for you, try and pinpoint the most common methods you use to conduct banking transactions to find a provider who offers those services. If you rarely-ever step into a bank branch, then a no fee chequing account from an online-only bank could be the right fit. On the other hand, if you're looking to bundle multiple financial products with one provider and don't want to manage accounts from different banks at the same time, a chequing account from a big bank may be the better option.
