What Is A Chequing Account? Everything You Need To Know

A chequing account is a bank account used to store funds to cover everyday purchases, like groceries, gas, entertainment, or clothing. A chequing account typically comes with a chequebook and a debit card.

The cost of carrying out a transaction with a chequing account is usually low or free. Some accounts will only offer a certain number of free transactions before charging a monthly fee. However, this monthly fee can also be waived if you maintain a minimum balance in the account. Unlike a savings account, a chequing account typically doesn’t accrue interest on the funds within.

As mentioned previously, a chequing account stores money for routine expenses, so it’s designed to be easy to pay bills, as well as add, transfer and spend funds. Here’s how to use a chequing account in more detail:

How to Fund Your Chequing Account

You can add funds to your chequing account by transferring money from other accounts or by depositing funds directly into a chequing account. This can be done through direct deposit, through a payroll deposit from your employer or through a cash deposit, paper cheque or Interac e-Transfer.

How to Use Your Chequing Account

You can use your chequing account to pay for things, transfer funds, pay bills and make withdrawals.

For in-store purchases, simply use the debit card connected to your account to pay. You can typically transfer funds to different accounts (like your savings or investment account) or make Interac e-Transfers online, through your banking app, over the phone or in person at your bank branch. For bill payments, again, they can be done online, through your bank’s app, over the phone or at the branch. You can withdraw cash from your chequing account at the branch or at your institution’s bank machine, using your debit card. You can also use your debit card at an ATM that’s outside your bank’s network to withdraw cash, though the ATM operator will charge an additional fee. Alternatively, a chequing account typically comes with paper cheques which can be used to pay for purchases.

If you are a Canadian citizen, you have the right to open a bank account. Whether it be chequing, savings or investment. You’ll need to provide your bank of choice with a couple of pieces of information. First, they’ll need to ensure you are who you say you are. In the finance world, this is referred to as “KYC’” or “Know Your Customer”, and it is common practice for all Canadian banks.

To open a chequing account, you’ll need to provide two official documents, one with your name and current address, the other with your name and birthday. They could include ID like a Photo ID card or a driver’s license, a passport, tax assessment notices or even recent bank account statements.

Another option is to provide just a single document that gives your name and birthday, but only if your identity is also confirmed by either a customer who is in good standing with the bank, or someone who is of good standing in whatever community you happen to be opening your new chequing account.

There are no legal limits to the number of chequing accounts you can open, but some banks, like BMO, will only give you one debit card and one lead account used to pay account fees. This means that while you can have multiple chequing accounts with BMO if you want to pay for a debit card transaction with money from one of your other chequing accounts, you must first transfer the money into your lead account.

Thanks to the Canada Deposit Insurance Corporation (CDIC), account holders are automatically insured in the event a bank or other financial institution fails. Up to $100,000 in your name, including in chequing accounts, will be paid out. However, if you share a chequing account with another person, the two of you are protected for a joint total of $100,000.

While all chequing accounts allow an account holder to pay for everyday purchases using either a debit card or ATM cash withdrawal, there are several different varieties:

• No Fee Accounts: A no-fee chequing account, as the name suggests, offers the standard features of a chequing account with no monthly fees, ATM fees, or transaction fees.
• Hybrid Accounts: A hybrid bank account combines the flexibility of a chequing account and the interest accruement of a high interest savings account (HISA), although they don’t tend to be as lucrative as a dedicated HISA.
• Student/Senior Accounts: Account holders who are students or seniors receiving the Guaranteed Income Supplement, or are seniors with disabilities who are recipients of the Registered Disability Savings Plan can qualify for a maximum of $4 a month in fees.

Related: Best Student Chequing Accounts

A chequing account provides various services , which include:

• Direct Deposits: Your employer or another payer can deposit money into your bank account without the need for a paper cheque or ATM cash deposit.
• Debit transactions: Through a bank-issued debit card tied to your chequing account, you can pay for purchases.
• Interac e-Transfers: You can send or receive money through Interac e-Transfers, which are a way to send money via a combination of email and online banking to any account holder with a bank account at banks that are part of the Interac network.
• Transfers: Transfer money from your chequing account into other accounts, like a savings account, an RRSP or a TFSA.
• Bill Payments: Instead of manually paying for rent, utilities, or other regular expenses, you can set up a chequing account to automatically withdraw money. You can also pay your credit card from your chequing account.
• Overdraft protection: If you are ever short of funds and cannot complete a transaction, this feature covers it temporarily.

If you’re looking for a chequing account, consider one with the lowest fees possible. Also, watch for conditions that require you to have a minimum balance or other conditions to keep fees low. Many chequing accounts don’t accrue interest, but consider any accounts that do. Lastly, consider how easily a chequing account interacts with any finance apps you use.

A chequing account is meant to hold funds for quick spending, while a savings account acts as a longer-term depository for your cash. Chequing accounts typically have low, or no, transaction fees, while savings accounts usually charge high fees for debit transactions (if they allow them at all). The flipside, however, is that savings accounts accumulate interest.

Some chequing accounts do earn cash back rewards, particularly accounts from branchless financial institutions like EQ Bank and Neo Financial.

Generally speaking, chequing accounts do not earn interest on any of the money held within them. Only a few chequing accounts in Canada are interest bearing. financial institutions may offer it.

The EQ Bank Personal Account is the best chequing account in Canada, based on previous analysis by Forbes Advisor Canada. Combining the best features of a no-fee chequing account with a 4% interest rate on all deposits every month, as well as a 0.50% cash back reward on all purchases made with the EQ Bank card.

Even if you have a multitude of other accounts and financial products at your disposal, when choosing a chequing account, be sure you’re comfortable with its features, any fees, and the institution providing it—you’ll be using this account every day.