What is a Chequing Account?

All chequing accounts aren't created equal. Learn what is a chequing
account, how does it work, the pros and cons of chequing accounts and more!

The most basic bank account without a doubt is a chequing account. A chequing account offers all the basic features you’ll need in a bank account: the ability to write cheques, deposit funds and withdraw money from an ABM, to name a few. But all chequing accounts aren’t created equal.


In this article we’ll look at what is a chequing account and how does it work, the pros and cons of chequing accounts and best practices when using a chequing account. After reading this article, you’ll be well-equipped with the knowledge you need to choose the chequing account that’s right for you.

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What is a Chequing Account?

A chequing account is a safe and convenient place to keep the money that you plan to use for daily spending and to pay bills on a monthly basis. It’s the most basic of all banks account. Chequing accounts are quite prevalent in Canada. Most banks and credit unions offer them.


Chequing accounts offer a lot more than simply the ability to write cheques. Most banks and credit unions offer similar features, including ABM transactions, direct deposit, money transfers, online banking and mobile cheque deposit.


It’s best to use your chequing account for daily spending rather than saving. If you have money that you don’t intend to use over the coming months, it’s best to consider other savings options that pay a higher interest rate, such as savings accounts and guaranteed investment certificates (GICs).

Chequing accounts are mostly meant to be transactional accounts, helping you better manage your cash flow. If you’re like most Canadians, you probably have your paycheque from work deposited into your chequing account. Likewise, if you make purchases with your debit card or have bills coming due, you’ll most likely use your chequing account.

In terms of liquidity, the money in your chequing account is usually the easiest to access. Unlike a GIC you can withdraw your money at any time without paying a penalty. However, that comes at a cost. The interest rates on chequing accounts tend to be minimal. In fact, some banks charge a monthly fee for chequing accounts, meaning that it’s costing you actual money to keep money in your chequing account.


The money in your chequing account is pretty easy to access. You can pay someone by writing a cheque. If you’re making a purchase in a store, you can use your debit card to withdraw money directly from your chequing account to pay the retailer.


Storing your money in a chequing account offers you some peace of mind as well. If anything were to happen to the bank or credit union where your chequing account is at, CDIC protects up to $100,000 of your money.

How a Chequing Account Works

Here are some key features of chequing accounts to be aware of:


You’re able to deposit your money at any time into a chequing account. You’re also able to set it up with your employer so that your paycheque is automatically deposited into your bank account.


You can access the money in your chequing account at any time in one of several ways: using your debit card, withdrawing money from an ABM, withdrawing money from a branch teller, writing a cheque and paying bills online. Keep in mind that there’s usually a limit to how much money you can withdraw in any given day.

Interest Rate

You’ll earn next to nothing byway of interest for storing money in your chequing account. That’s why it’s best to only keep money there that you need in the short-term there.


The amount of fees you’ll pay depends on the bank and credit union as well as the individual chequing account you choose.

Pros and Cons of Chequing Accounts

Let’s look at some of the pros and cons of chequing accounts to help you decide which chequing account is right for you.


  • You’re easily able to access your money in person, online or using your mobile device.
  • If you prefer to do your banking in person, most banks offer ABM free or charge. Some banks also let you do your banking in person with the assistance of a teller.
  • In the very unlikely event that something were to happen to your bank or credit union, your money is protected by CDIC insurance.


  • Most banks and credit unions charge monthly fees on chequing accounts. If you’re not careful, this can slowly eat up your savings.
  • Some banks limit the number of transactions you get in any given month. You’ll need to use your chequing account sparingly or face costly fees.
  • The interest rates offered on chequing accounts (if any) are very minimal. In some case you’re almost better keeping your money under your mattress (although your money is better protected at the banks).

Best Practices for Chequings Accounts

If you’re looking to make the most of your chequing account, there are several things you can do.

First and foremost, choose a chequing account that’s well suited to your needs. For example, if you prefer to bank in person with a teller, figure out how many teller visits you expect to do in a month. Then look for a chequing account with a sufficient number of teller visits included so you won’t be paying extra fees out of pocket.

Some banks waive the monthly fees on chequing accounts if you keep a minimum balance. If you’re looking to save on bank fees, look for a chequing account with a low minimum balance. You’ll be giving up a lot of potential interest by keeping, say, a $5,000 minimum balance to avoid fees.

It’s also a good idea to keep a minimal amount of money in your chequing account, so you’re not tempted to spend it. A good practice is to figure out how much money from your paycheque at work you need to cover your bills. Any money that’s left over, deposit it in your savings account, so it’s not as easy to access and out of sight, out of mind.

It can be tough to keep track of all of the money coming and going into your bank account, so always keep a float of at least $1,000 or $2,000. Although you may want to maximize the amount of money you have in your savings account, it’s not worth it if you end up paying a costly not sufficient funds (NSF) charge.

Although you may not be getting a monthly bank account statement, it’s still a good idea to regularly review your chequing account. Make sure you recognize all the transactions. If you notice any suspicious transaction, report them right away to your bank.


This also presents a good opportunity to save money. You may notice a subscription for a service like Netflix that you forgot to cancel. By noticing it, you can cancel the subscription, especially if it’s for something you barely use, and save money going forward.

Saving Money on Chequing Account Fees

If you’re anything like us, chequing account fees are the bane of your existence. We’re a strong believer that you shouldn’t have to pay banking fees for a decent chequing account. But even no fee chequing accounts charge bank fees for certain transactions. Here are some ways to save money on those pesky chequing account fees.

  • If there’s a limit to the number of transactions you get per month, keep an eye on them to ensure you don’t go over and get dinged with overage fees.


  • If you’re required to keep a minimum balance, make sure you stay above it at all times during the month. Otherwise, you could face a fee for every single transaction and the full monthly fee, even if your balance only drops below the minimum amount for a single day.
  • When possible bank online, by mobile device or by using ABMs. Only bank at the branch when absolutely necessary. You’ll save on bank fees and likely save time too.


  •  Use your bank’s ABM. Avoid the ABMs of another bank or credit union unless it’s a financial emergency. To avoid the temptation to use another bank’s ABM, if you plan to visit the branch in person from time to time, choose a bank that’s in a convenient location close to work and/or home.
  • Keep enough money in your bank account to cover cheques you’ve written, as well as bill payments (heat, hydro, water, property taxes, etc.). This will help avoid NSF charges.

Types of Chequing Accounts

Here’s a list of some  of the most common types of chequing accounts in Canada.


This is the standard chequing account offered by most banks and credit unions in Canada. With a standard bank account, you’ll get a specific number of transactions in the month. If you go over the number of transactions, you’ll likely face overage charges. You’ll generally have to pay a monthly fee of $10 or $15 per month, although it largely depends on the bank/credit union and the features of the chequing account itself.


Some banks and credit unions offer student chequing accounts. With a student chequing account, the fees are typically lower than a basic account (or the fees might be waived entirely). To take advantage of this, you may be required to show proof that you’re enrolled in post-secondary education full-time. Similar to this is a youth account. Again, you’ll usually pay low or no fees on your chequing account.

No Fee

If you’re looking to avoid bank fees at all cost, you’ll want to consider signing up for a no fee chequing account. A no fee chequing account is a no frills chequing account with the most basic of features. As such, it might not work for everyone. You’ll want to look at the features that you use the most and see if it’s a good fit.


Although it’s called a no fee chequing account, there may be charges for other things. For example, you might have to pay fees for e-transfers. If use that feature a lot, it might be worth going with a basic chequing account where those are already included at no extra charge.


About the Author:

Sean Cooper is the bestselling author of the book, “Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians”. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. Sean is a personal finance journalist, money coach and speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense.