Best Chequing Accounts in Canada
It may seem as if the FinTech sector is dominating the payments scene with its online payment processing apps and online banks, but having a chequing account is still a valuable proposition for day-to-day banking. A chequing account allows you to access ATMs across Canada, conduct deposits and bill payments, and transfer money. However, you should take care to choose between different types of chequing accounts. Some offer the most basic features while being free, while others offer monthly fees with extra perks and rewards programs. Knowing your lifestyle will grant you an insight into which Canadian chequing will best fit with your personal finance.
What is a Chequing Account?
Any deposit account in a bank or a credit union that you can use to pay bills through ATMs or debit cards. However, it is understood that money in a chequing account will be deposited for a short time, usually paying for any number of monthly expenses. Therefore, such an account would generate a low-interest rate compared to a savings account. Outside using a debit card, which is standard practice these days, you can literally write a cheque to pay a variety of things, from your daily groceries to your monthly mortgage. Looking for a high interest option? You’re better off considering a high-interest savings account or a TFSA if you find better value in high interest rates over unlimited transaction!
Types of Chequing Accounts
Depending on your current employment and financial status, you can choose between these bank accounts:
No-fee daily chequing account. You will find that this is the most common account across Canadian banks, such as Motive Financial, Scotiabank Student, Simplii Financial, and Motusbank. In addition to not having any monthly fees, these chequing accounts offer different interest rates, ranging from 0.05% (Simplii Financial or Alterna) to Motive Financial (0.25%). No-fee chequing accounts also offer free paperless statements, no minimum balance, CDIC insurance, and unlimited free transactions, including unlimited debit transactions, free Interac e-transfers.
Subscription-based chequing account. These are usually reserved for businesses or people who know exactly how they will spend their money. Depending on the package, the monthly fee can range from $4 to $31, as exemplified by Scotia Basic Scotia Ultimate chequing accounts. In return for the monthly fee, you are offered perks in the form of rewards on debit card purchases, credit card fee waivers, or free safety deposit boxes (and you can even earn Scotia Rewards Points).
How to Choose the Best Chequing Accounts
- Do you tend to use more ATMwithdrawals or debit purchases?
- Do you need to withdraw more money from foreign ATMs?
- Do you care about the aesthetics of your debit card?
- Are ATMs in your residential area aligned with the network of your chequing account in order to avoid extra fees?
These are all the questions you need to ask yourself, but when it comes down to it, most banks have equalized the features of their chequing accounts. For example, while domestic ATM fees are the same at $3, foreign ATM fees are almost the same at $3, except for Alterna, which has an ATM fee of $5. Likewise, Interac e-Transfers are free across the board. Most banks also offer negligible interest rate differences.
However, if you are a student, Scotiabank Student Banking Advantage Plan gives you a chequing account with the ability to monetize your spending. For every $5 you spend via debit purchases, you get 1 point in its rewards program (SCENE points).
If you plan to hold at least $5,000 in your chequing account, Scotiabank Ultimate Package seems to then become the best free chequing account. The monthly fee of $30.95 is then waived, all transactions are unlimited, and you get ten free equity trades with the bank’s iTrade app during the first year. On top of that, you receive SCENE points and a free safety deposit box.
The Motusbank No-fee Chequing Account offers unlimited debit purchases, bill payments and withdrawals—along with free, unlimited Interac e-Transfers. Also there’s monthly account fees and no minimum balance required! It also offers some decent perks — like 0.15% interest on every dollar.
Chequing Accounts FAQ
Do Chequing Accounts Earn Interest?
Yes, but much lower than a savings account. Some banks have fixed interest rates, while others hold variable interest rates. For example, at Scotiabank, over $100k will grant you a 0.15% interest rate, while Motive Financial will have a fixed interest rate of 0.25%.
What is the difference between a chequing and savings account?
Given the transactional frequency of both accounts, savings accounts offer higher interest rates, while fewer free transactions, so the exact opposite to chequing accounts. Obviously, a checking account is designed with frequent use in mind, while a savings account is used to deposit leftover money for later use. If you tend to do many monthly transactions and ATM withdrawals, you would definitely benefit from a chequing account over a savings account
How much money should I keep in my chequing account?
Given the above Scotiabank example with the Ultimate package, a lot of money on hold will give you extra benefits, including waiving the monthly fee. However, this sometimes also requires a minimum balance requirement. This would also marginally increase your interest rate. Outside these concerns, hold as much money as you want it to be available for expedient purchases. Otherwise, hold your money in a savings account, especially if it is tax-advantaged.
How can I reduce my fees?
Having your chequing account fees waived or avoiding them altogether may be easier than you think. Most financial institutions have set up ways to lower these account fees or enjoy an annual fee waiver, which could end up burning a hole in your wallet. You can also avoid them at all costs by opting for a no-fee chequing account. Learn more here!
Should I enrol in overdraft protection?
Overdraft protection is an optional financial product offered by monstering institutions that you can add to a chequing account. It’s a way to help you cover occasional shortfalls from transactions that may occur in that chequing account up to an approved limit. It’s up to you! However, many consumer advocates recommend against getting overdraft protection for ATM and debit card transactions owing to the high fees.