Whether you're depositing your paycheque, paying rent, or grabbing groceries, chances are you're using a chequing account. It's one of the most fundamental tools in personal finance — a place to park the money you need for everyday life. But with so many options available, understanding how chequing accounts work can help you choose the right one and avoid unnecessary fees. This guide covers what a chequing account is, how it differs from a savings account, and what to look for when you're ready to open one.
What is a chequing account?
A chequing account is a bank account designed for routine transactions — the money you use to pay bills, buy groceries, and cover regular expenses. Unlike a savings account, it's built for frequent deposits and withdrawals rather than long-term growth.
The name comes from the fact that you can draw from the account by writing physical cheques to people and businesses, although these days most people simply use their debit card and Interac e-Transfer (e-Transfer) to move funds around. But the name stuck.
What are chequing accounts used for?
Think of a chequing account as your financial home base for routine money movement.
How chequing accounts work day-to-day
When you open a chequing account, you're usually (but not always) issued a physical card or a debit card that you can use for making in-store or in-person payment through a payment terminal. You can also use the card to buy things online. The funds are deducted directly from your account balance. You can set up automatic payments for recurring bills, write physical cheques if needed, and send electronic transfers.
Some chequing accounts allow you to earn interest on your account balance.
There are three main types of transactions that move money through your account:
Deposits: your paycheque, government benefits, e-transfers or cash added at an ATM.
Withdrawals: ATM withdrawals, debit card purchases, e-transfers or bill payments.
Transfers: moving money to and from different accounts.
Common chequing account fees
Chequing accounts can come with several types of fees, though many digital banks now offer low-cost or no-fee options:
Monthly maintenance fees: often waived if you maintain a minimum balance or set up direct deposit.
Per-transaction fees: charged when you exceed your monthly limit of debit purchases or transfers.
ATM fees: applied when you use an ATM outside your bank's network.
Non-sufficient funds (NSF) fees: charged when you try to spend more than your account balance.
Overdraft fees: interest and fees for borrowing when your balance falls below $0 (if you have overdraft protection).
How much money to keep in your chequing account
A good rule of thumb is to keep enough money in your chequing account to cover 3 to 6 months of living expenses, plus a small buffer. This ensures you can pay your rent, groceries, and bills without worrying about an unexpected transaction pushing your balance below zero. Any extra cash beyond that buffer is usually better off in a savings account or investment portfolio where it can earn a higher return.
Chequing account vs savings account
While chequing accounts are necessary for everyday transactions, a savings account is another important financial tool. Here's how they differ:
Chequing account | Savings account | |
|---|---|---|
| Purpose | Daily spending and transactions | Setting aside money to grow |
| Interest | Low or none | Higher rates |
| Transactions | Unlimited | Often limited per month |
| Access | Debit card, cheques, bill payments | No debit card; transfers only |
| Ideal for | Rent, bills, groceries | Emergency fund, vacation savings |
A savings account is particularly useful for short to medium-term goals, such as creating an emergency fund or saving up for a vacation. To maximize your savings, look for accounts with high interest rates and low fees, then set up automated deposits so your money can grow undisturbed.
What is an online chequing account?
An online chequing account operates entirely through a digital platform with no physical branches. The main draw is convenience and potentially lower cost — you can often sign up online with an internet connection and government-issued identification (ID), depending on the institution's verification requirements.
Because there are no overhead costs, online accounts typically offer:
Lower fees: may include $0 monthly account fees.
Transfers with fewer fees: e-transfers and between-account transfers may be included at no additional cost.
Different overdraft terms: overdraft fees may be lower than at some traditional banks.
Mobile banking tools: mobile access, alerts, and automated transfers.
What is an interest-bearing chequing account?
An interest-bearing chequing account is a chequing account that allows your money to earn interest. Since these accounts are often online-based, they come with lower fees (or no fees) than more traditional chequing accounts, though it's possible they'll have more restrictions.
What is a business chequing account?
A business chequing account belongs to a business entity rather than an individual. Like a personal account, it allows authorized people to access funds, but all transactions are recorded as business activities.
Key differences from personal accounts include:
Higher fees: often associated with higher transaction volumes and added services.
More documentation required: a business licence and tax identification (ID) may be needed to open the account.
Business-specific features: tools to accept card payments and issue business cheques.
Keeping a separate business account is important for tax purposes — mixing business and personal finances can make bookkeeping and tax reporting more time-consuming. A dedicated business account also adds legitimacy and professionalism to your enterprise.
What to look for in a chequing account
When choosing a chequing account, prioritize these features:
Low or no monthly fees: with no minimum balance requirement, if available.
Unlimited transactions: enough included transactions that you do not need to track each debit purchase.
Electronic transfers with fewer fees: e-Transfers and bill payments that may be included at no additional cost.
ATM access: a large network, or fee reimbursements for out-of-network withdrawals.
Mobile app features: mobile access, alerts, and account management tools.
Overdraft protection: to help reduce declined payments and potential NSF fees if you overspend.
