Chequing vs Savings Account in Canada Explained
One of the first financial decisions newcomers make in Canada is choosing between a chequing account and a savings account. Although both are offered by almost every Canadian bank, they are designed for different purposes. Understanding the difference can help you avoid unnecessary fees, earn interest where appropriate, and manage your money more effectively.
This guide explains how chequing and savings accounts work in Canada, when you should use each one, and which type of account is usually the best choice for newcomers.
1. Fact Check: What Is a Chequing Account?
A chequing account is designed for everyday banking. It allows you to deposit your salary, pay bills, use debit cards, withdraw cash from ATMs, and send or receive Interac e-Transfers. Most Canadians use a chequing account as their primary account for daily spending.
- ✔ Designed for everyday transactions
- ✔ Unlimited or limited monthly transactions depending on the plan
- ✔ Debit card included
- ✔ Direct deposit and bill payments supported
- ✔ Usually earns little or no interest
Official information:
Government of Canada – Bank Accounts
2. What Is a Savings Account?
A savings account is intended for storing money rather than spending it every day. These accounts generally pay interest on your balance, although interest rates vary between banks and products. Many savings accounts have transaction limits or are less convenient for frequent payments.
- ✔ Designed for saving money
- ✔ Interest is usually paid on the account balance
- ✔ Better for emergency funds and future goals
- ✔ Not ideal for frequent purchases
Fact check: Interest earned on savings accounts may be taxable depending on your situation, and banks may request your Social Insurance Number (SIN) for tax reporting purposes.
3. Chequing vs Savings: Key Differences
| Feature | Chequing | Savings |
|---|---|---|
| Daily Spending | ✔ Yes | Not Recommended |
| Debit Card | ✔ Included | Usually Limited |
| Interest | Low or None | Usually Yes |
| Best Use | Bills & Spending | Saving Money |
In practice, many Canadians use both accounts together—receiving income into a chequing account while transferring extra money into a savings account to earn interest.
4. Which Account Should Newcomers Open First?
For most newcomers, opening a chequing account should be the first priority. Employers generally deposit salaries directly into a chequing account, and you will also use it for rent payments, debit purchases, and everyday expenses.
Once your regular banking is set up, adding a savings account can help you build an emergency fund or save for future goals while earning interest.
- ✔ Open a chequing account immediately after arrival.
- ✔ Add a savings account once your finances are stable.
- ✔ Compare monthly fees and transaction limits before choosing a bank.
5. Compare Newcomer Banking Programs
Most major Canadian banks offer special banking packages for newcomers that include fee waivers, unlimited transactions for a limited period, and welcome bonuses. Before opening an account, compare the available programs and read the account terms carefully.
- RBC Newcomer Banking
- TD New to Canada
- Scotiabank StartRight Program
- CIBC Newcomer Banking
- BMO NewStart Program
6. Final Recommendation
✔ Use a chequing account for salary deposits, debit purchases, ATM withdrawals, and bill payments.
✔ Use a savings account for money you don’t need to spend immediately and want to keep separate while earning interest.
✔ Most newcomers benefit from opening both accounts, using each for its intended purpose.
Choosing the right account is one of the simplest ways to build good financial habits in Canada. By understanding the difference between chequing and savings accounts, you can reduce banking fees, organize your money more efficiently, and make the most of newcomer banking programs offered by Canada’s major financial institutions.