5 Types Of Chequing Accounts

1. Traditional Chequing Account

A traditional chequing account, also referred to as a standard or basic chequing account, offers the ability to write cheques. It also provides access to a debit card that you can use to make purchases and withdraw cash at ATMs.

This type of chequing account may charge a monthly maintenance fee. But many banks and credit unions will waive this fee if you meet certain requirements. For example, you may need to sign up for direct deposit, maintain an average minimum daily balance, sign up for additional financial accounts and services or meet other requirements.

There may be a minimum deposit requirement you need to meet to open a traditional chequing account. Once you have a standard chequing account, you can link your debit card to a mobile wallet or a mobile payment app. You can also connect your chequing account to savings accounts, RRSPs and other types of financial accounts within or outside of your bank.

If you don’t need or want many special features, a traditional checking account can be an excellent way to start building a reliable home base for your money.

2. Premium Chequing Account

Premium chequing accounts offer upgraded benefits and features. These accounts may have a higher initial deposit requirement, higher minimum balance requirements and a higher monthly maintenance or service fee. But they can offer various valuable benefits, including rewards, bonuses and interest on deposits.

The exact rules and requirements of premium checking accounts depend on the bank or credit union. But generally, the more money you deposit with your bank, and the more financial products you sign up for, the more benefits your bank is likely to provide. Think of it like a frequent-flier program for banking—the more business you do with your bank, the harder it will try to give you a premium experience.

Here are a few major banks that offer premium checking accounts, along with their key perks and features:

3. Interest-Bearing Chequing Account

Interest-bearing chequing accounts pay interest on balances in the same way as a savings or investment account, such as a GIC. Because interest rates are so low, many banks have dropped yields on their interest-bearing chequing accounts. They also are few and far between in Canada.

However, it’s still possible to find banks offering high-interest chequing accounts.

Many credit unions offer chequing accounts that pay dividends, and some of these accounts are more competitive than the interest-bearing accounts found at banks. If you are willing to donate or pay a small fee to join the credit union, you can often get a credit union account even if you don’t live in the state where the credit union is located.

Getting the highest interest rates from checking accounts can be complex. Some banks or credit unions may require you to meet certain monthly transactions or minimum balance requirements to earn interest. Earning a higher APY may not be worth all the effort. But if you want to earn money from your chequing account balance, interest-bearing accounts can make it possible.

4. Rewards Chequing Account

Rewards are another type of special feature that some checking accounts offer. Like credit cards that reward you for everyday purchases with cash back, rewards points or special discounts, some chequing accounts reward you for your daily spending.

For example, the PC Money Account gives you 130,000 PC Optimum points when you open a new account. See website for details. That’s a possible annual cash back reward amount of $360—and with no fees. Keep in mind that chequing accounts with rewards may charge fees or have complicated requirements that make it hard to get the account’s full benefits.

5. Student Chequing Account

Student chequing accounts are designed for teens and college students who want a convenient way to manage their money. Several banks offer special student chequing accounts designed for the needs of high school and college students.

Whether you’re getting started with your first bank account or a parent helping your child set up their separate financial life, a student chequing account can be a good option.

Some of the best student chequing accounts include features such as:

• No ATM fees
• No monthly maintenance fees
• Next day grace periods for overdrafts
• New account sign-up bonuses

When opening a student chequing account, it’s important to understand what happens to that account once the student graduates. If the bank or credit union automatically switches student chequing to standard chequing, this could mean an increase in fees or loss of certain benefits. Being aware of any chances beforehand allows you time to decide if you want to switch to a different account or different institution altogether.

Finding the right checking account for your needs starts with asking the right questions. Specifically, when comparing different types of chequing accounts, consider what you need that account to do for you and what you value most.

Once you’ve determined what type of chequing account may work best, you can move on to the research stage. This is where you’ll compare individual chequing accounts to find the one that offers the best combination of features, benefits, convenience and cost.

Related: Best No-Fee Chequing Accounts In Canada

When choosing a chequing account, there are several factors to consider.

Average Monthly Balance

Some chequing accounts have average monthly balance requirements that you must meet in order to avoid a monthly maintenance fee or service fee. If escaping high banks fees is a priority, it’s important to consider how your typical average monthly balance compares to what a bank requires for a chequing account.

The easiest way to do this is to look at your ending balances in your current chequing account for the past six months. You can then add those amounts up and divide by six to find your average monthly balance. This is a simple calculation but it can be helpful for ruling out accounts that are a mismatch based on how much you typically keep in chequing.

Banking Habits

Habits are another important consideration. You don’t want to put time and effort into switching banks only to realize it doesn’t necessarily work for you. When measuring the suitability of a bank or credit union, you may consider things like:

• Online and mobile banking access
• Branch access, if you’re looking at traditional banks
• ATM access
• Mobile banking features, such as remote deposit capture

The main purpose of the account also matters. For example, if you’re a college student then it could make more sense to look for student checking accounts versus premium accounts that require you to maintain a $25,000 average monthly balance.

Chequing Account Fees

Fees are one of the most important considerations when comparing different types of chequing accounts. The more chequing account fees the bank or credit union charges, the more your account will potentially cost.

When comparing banking fees, it can be helpful to review the account disclosures and fee schedule first. Some of the key fees to look for include:

• Monthly maintenance fees
• Overdraft fees
• Insufficient funds fees
• Foreign ATM surcharge fees
• Wire transfer fees
• Early account closing fees

Chequing Account Interest

If you’re considering interest-bearing chequing accounts, remember to look at the interest rate and APY the account earns. Also, consider how that rate is applied.

For example, some banks may offer the same APY across all balances in chequing. Others, however, may have tiered rates. So, you may earn a higher rate up to the first $10,000 or $25,000 in your account, then a lower rate for balances over that amount.

Bottom Line

Chequing accounts may seem simple, but there is a lot of variety among different chequing account types. There are checking accounts that can help you avoid ATM fees, earn interest, get welcome bonus rewards, send your child off to college or get a fresh start on your financial life. The one you choose depends on your goals. Next time you’re in the market for a new chequing account, think about your goals and what a chequing account can do for you.