What is the difference between a chequing account and a savings account?
Chequing is for money moving in and out; savings is for money that stays put. Chequing suits everyday spending, bills and pay deposits, with many transactions and usually little or no interest. Savings usually earns some interest but allows fewer transactions. Both are deposits, so in your name at one CDIC member they share the $100,000 own-name limit.
Side by side
| Chequing | Savings | |
|---|---|---|
| Purpose | Everyday spending, bills, pay deposits | Emergency fund and goals |
| Transactions | Many — debit, bill pay, pre-authorized debits, e-Transfers | Few — often limited or charged after a set number |
| Interest | Usually little or none | Usually some; rates vary and may be promotional |
| Fees | Monthly fee plans are common; waivers with a minimum balance | Often no monthly fee |
| CDIC coverage | Eligible deposit | Eligible deposit — same category as chequing if both are in your name |
Because both are deposits in your name, at the same CDIC member they share the $100,000 own-name limit. Check your totals with the deposit insurance calculator.
Choosing a chequing account
- Count monthly transactions and compare against plan limits.
- Check whether your usual balance would waive the monthly fee — the fee calculator shows the trade-off.
- If you qualify, ask about a no-cost account.
Choosing a savings account
- Look past introductory rates to the ongoing rate.
- Check how fast transfers reach your chequing account.
- Consider whether a GIC suits money you won’t need for a fixed term.
Automate a transfer from chequing to savings on payday. What you don’t see, you don’t spend.
How much should I keep in chequing?
Keep enough to cover the bills and spending that will come out before your next pay, plus a small cushion. Most of the rest usually belongs in savings. FCAC notes that chequing accounts usually don’t earn interest, while savings accounts are meant for storing money and earning interest.
Sam is paid $2,500 on the 1st and the 15th. About $2,000 goes out between each payday: rent, phone, groceries and transit. Sam keeps a $300 cushion in chequing so a late bill or a pre-authorized debit doesn’t bounce. That leaves about $500 each payday, or $1,000 a month, to move to savings automatically.
Check the fee rule before you pick a cushion. If your chequing fee is waived only above a minimum balance, the cushion may need to sit above that line. FCAC warns that some institutions charge the full monthly fee if your balance drops below the minimum even for one day.
Which account should each kind of money go in?
| Money | Usually fits in | Why |
|---|---|---|
| This month’s bills and spending | Chequing | Debit purchases, bill payments and pre-authorized debits come out of here. |
| A cushion against bounced payments | Chequing | Helps you avoid non-sufficient funds (NSF) fees and declined payments. |
| Emergency fund | Savings, or savings inside a TFSA | Quick access, and it can earn interest. |
| A goal with a known date | Savings or a GIC | A GIC usually locks in a rate for a set term — see savings accounts and GICs. |
| Money you’ll spend in US dollars | A USD account | See US-dollar accounts. |
Do I pay tax on savings interest?
Usually, yes. FCAC says you usually pay income tax on the interest you earn in a savings account. The CRA says to report interest paid or credited to you even if you didn’t get a tax slip. You may not get a T5 slip if your total investment income is under $50, but you still have to report it.
Illustration: if your savings earn $40 of interest in a year, you might not get a T5, but the $40 still goes on your return. Interest earned inside a TFSA is different: FCAC says you don’t pay tax on the interest you earn or the money you withdraw from a TFSA.
How is savings interest actually paid?
FCAC says institutions usually calculate interest daily and deposit it monthly. Some apply two or more rates to different parts of your balance, so check whether the higher rate applies to all your money or only to the part above a set amount.
You hold $5,000 in an account that pays a lower rate on the first $1,000 and a higher rate above that. Only $4,000 earns the higher rate. An account that pays one rate on the whole balance once you keep $1,000 would pay its rate on all $5,000. Same balance, different interest. Compare real accounts in the savings rankings.
FCAC also gives the example of an account that pays no interest for a month in which you make a withdrawal. Read the terms before you count on the advertised rate.
Common mistakes with a chequing and savings pair
- Paying bills from savings. FCAC says most savings accounts offer a limited number of transactions, and frequent use can mean higher fees.
- Dipping below a fee-waiver minimum for a day. That can trigger the full monthly fee at some institutions.
- Forgetting a promotional rate ended. FCAC suggests reviewing your savings account, especially after a promotional rate ends.
- Assuming transfers are instant. FCAC says transfer times vary by institution and account type, so plan withdrawals ahead.
- Ignoring low-balance alerts. Banks must send an electronic alert when a chequing or savings balance falls below $100 by default, or an amount you choose.
- Putting too much at one institution. Chequing, savings and GICs in your own name at one CDIC member share one $100,000 limit, and that limit includes interest. Check with the deposit insurance calculator.
What to ask before you open the pair
- How many transactions does the chequing plan include, and what does each extra one cost?
- Is the monthly fee waived with a minimum balance? Is that based on your lowest daily balance or an average?
- Do phone or in-branch transactions count differently? FCAC notes that phone transactions with an agent may count as teller-assisted.
- How many free withdrawals or transfers does the savings account allow?
- Is the savings rate promotional? When does it end, and what is the rate after?
- Is interest tiered, and is it paid in months when you withdraw?
- How long does a transfer from savings to chequing take?
Then test real accounts against your own numbers in the true-cost finder or side by side in compare.
A worked example
Computed from FCAC fee data (National Bank from its fee guide), retrieved November 1, 2026
| Group | Light | Everyday | Heavy | Branch and cheques |
|---|---|---|---|---|
| Big Six banks (22 accounts) | $74 — Basic Bank Account (Scotiabank) | $155 — RBC Advantage Banking (Royal Bank of Canada) | $155 — RBC Advantage Banking (Royal Bank of Canada) | $134 — Basic Bank Account (Scotiabank) |
| Online-only accounts (17 accounts) | $0 — PC Money Account (PC Financial) | $0 — Personal Account (EQ Bank) | $0 — Personal Account (EQ Bank) | none can serve this |
| Ontario credit unions (46 accounts) | $0 — Infinite Package (The Energy Credit Union) | $0 — Infinite Package (The Energy Credit Union) | $0 — Infinite Package (The Energy Credit Union) | $0 — Infinite Package (The Energy Credit Union) |
| BC credit unions (14 accounts) | $54 — Essentials spending (Beem Credit Union) | $83 — Everyday spending (Beem Credit Union) | $107 — Everyday spending (Beem Credit Union) | $95 — Everyday spending (Beem Credit Union) |
Big Six accounts usually charge a fee unless you hold a minimum balance, so they cost more at these low balances — and less once your balance clears the waiver. Online accounts can’t do branch visits. Run your own numbers →
What this means for you
Most people do best with one of each, each with a clear job. To set the pair up:
- Size your chequing balance
Keep enough for the bills and spending due before your next pay, plus a cushion. If your fee is waived above a minimum balance, keep the cushion above that line every day; some institutions charge the full fee for a single day below it. - Automate the rest
Schedule a transfer to savings on payday, so money you don’t need this month leaves chequing before you spend it. - Pay bills from chequing
Most savings accounts include few transactions, and frequent use can mean higher fees. - Read the savings terms
Check whether the rate is promotional and when it ends, whether a higher rate applies to your whole balance or only part of it, whether interest is paid in a month you withdraw, and how long transfers back to chequing take.
Turn on low-balance alerts: banks must send one when a chequing or savings balance falls below $100 by default, or an amount you choose. At tax time, report savings interest even if you didn’t get a T5; interest earned inside a TFSA isn’t taxed. And remember that chequing, savings and GICs in your name at one CDIC member share one $100,000 limit, including interest. Check it with the deposit insurance calculator, and compare real accounts in the true-cost finder.
Frequently asked questions
Should I keep money in chequing or savings?
Keep what you’ll spend this month in chequing and the rest in savings or other products suited to your goals.
Are savings accounts CDIC insured?
Eligible savings deposits at CDIC members are covered up to $100,000 per category, combined with chequing and GICs in the same category.
How much money should I keep in my chequing account?
Enough to cover the bills and spending due before your next pay, plus a small cushion. If your fee is waived above a minimum balance, keep the balance above that minimum every day.
Do I have to report savings interest if I didn’t get a T5 slip?
Yes. The CRA says to report interest paid or credited to you even without a slip. You may not get a T5 if your total investment income is under $50.
Can I pay bills from a savings account?
Sometimes, but most savings accounts include only a limited number of transactions and may charge for more. Paying bills from chequing is usually cheaper.
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