Chequing vs savings
| Chequing | Savings | |
|---|---|---|
| What it’s for | Bills, your debit card, your pay | Money you’re not spending yet |
| Interest | Little or none | Some: compare the rate |
| Getting at it | Any time | Easy, but kept apart so it lasts |
Have your pay deposited into chequing, then set up an automatic transfer to savings on payday. Saving first, before you spend, is the easiest way to make saving happen. For money you won’t touch for years, a savings account inside a TFSA keeps the interest tax-free.
What to look for in a bank
- Low or no monthly fees. Big banks often waive them if you keep a minimum balance. Online banks and credit unions often have none.
- Enough free transactions for how you bank, including Interac e-Transfers and debit purchases.
- A good savings rate. High-interest savings accounts at online banks often pay much more than the big banks’ regular accounts. Watch for “promotional” rates that drop after a few months. Compare what they’d earn with the savings interest calculator.
- Overdraft protection only if you need it, as it comes with fees and high interest.
Most big banks offer a low-cost account for a few dollars a month, and a no-cost account for youth, students, seniors on the Guaranteed Income Supplement and some others. Ask for it. You also have the right to open a personal account at a bank without a job or an opening deposit, as long as you have acceptable ID.
Is my money safe?
Deposits at CDIC member banks are protected up to $100,000 per depositor, per member institution, in each eligible category. Accounts in your own name, joint accounts, TFSAs, RRSPs, RRIFs and FHSAs each count as separate categories, so the cover adds up:
- Chequing and savings in your name $120,000
- $100,000 covered, $20,000 not
- Joint account with your partner $60,000
- All covered
- TFSA savings and GICs $45,000
- All covered
- RRSP GICs $90,000
- All covered
$295,000 of $315,000 covered
A joint account is covered once for its joint owners together. To protect more, you can spread money across separate CDIC member institutions. Stocks, bonds, mutual funds and ETFs aren’t deposits and aren’t covered.
Savings, chequing accounts and GICs are covered. Investments such as stocks, bonds, mutual funds and ETFs aren’t deposits and aren’t covered by CDIC, even when you buy them through your bank.
Credit unions are covered by provincial deposit insurance instead, with limits that vary by province.
Overdrafts and fees
If a payment takes you below zero, the bank may cover it and charge a fee plus interest, or refuse it and charge an NSF (non-sufficient funds) fee. The company you were paying may add its own fee too. To avoid them:
- Keep a small buffer in chequing.
- Turn on low-balance alerts in your bank’s app.
- Check your statement each month for fees you didn’t expect.
If you have a problem with your bank, complain to the bank first. If that doesn’t settle it, the bank must tell you which external complaints body can review it, and the Financial Consumer Agency of Canada oversees how banks treat customers.
What next
Work out where your money goes with a budget, then start an emergency fund in your savings account.