What Is a Chequing Account?
A chequing account is the most basic transactional account you can have. It’s considered an account you can use every day. When you need to buy gas, grab groceries, or make a bill payment, people generally use their chequing account.
This makes sense, as it’s usually the account paycheques are deposited into and therefore a more appropriate account for daily transactions. Your funds in this account can be easily accessed at an ATM, online, mobile or in a branch.
You can use your chequing account to conduct the following transactions:
- Deposits (cash and cheques)
- Withdraw money (at ATMs, bank tellers, etc.)
- One-time purchases (groceries, gas, etc)
- One-time or pre-authorized payments
- Transfers (between accounts of the same institution)
- Interac e-Transfer® transactions
Different chequing account types offer a specified number of transactions per month and features, so it’s important to budget and figure out how many transactions you need depending on how you bank.
What Is a Savings Account?
If chequing accounts are for day-to-day transactions, savings accounts can help you achieve short- and long-term saving goals.
Instead of being used for day-to-day transactions savings accounts may be more appropriate for saving goals since these accounts earn interest. Although these accounts do not have a monthly fee, fees may be incurred if you go over your transaction limit.
If you’re saving up for a larger purchase, such as a vacation, a car, or even a down payment for your house – a savings account is probably right for you. It’s also a great account for your ‘rainy day fund’. You know, for when you need money for things you didn’t plan for, like car repairs or when the washing machine stops working.
Chequing vs. Savings: A Summary
Now that you’ve gone through the differences between the two types of accounts, you probably understand that the main differences between the two types of accounts is how many transactions you can use per month, the fees and potential to earn interest. If you’re like most, you need an account for daily spending, but you may also want an account for short or long-term saving.
Below is a quick breakdown of both.
Chequing Accounts
Pros:
- Ideal for everyday purchases, such as making bill payments or buying groceries
- Higher number of transactions you can perform per month
Cons:
- You don’t earn any interest on the balance you maintain in your account*
* Except for TD Student Chequing Account (which accumulates daily interest)
Savings Accounts
Pros:
- Some savings account may earn interest depending on the tier and your account balance3
- Back up fund for unplanned expenses or can help you achieve your financial goals
Cons:
- Can incur additional transaction fees
- Not meant to be used as an account for day-to-day transactions
You know you have your chequing account to access money at any time, and you know savings account is there for putting money away for later. Training yourself not to dip into your savings account now is an important step in preparing you for a financially successful future.
You may pay a fee to the ATM provider, and for foreign currency withdrawals at an ATM outside of Canada you will pay the foreign exchange related fee.
References
TD Bank. (2023). Chequing vs. savings account: What’s the difference? TD Bank. https://www.td.com/ca/en/personal-banking/advice/day-to-day-banking/chequing-vs-savings-account
