What is a Chequing Account?

Money is a universal language; it’s something we all deal with. We earn money, use it to pay bills and expenses, and can convert it easily to other forms of currency to be used elsewhere in the world. To keep track of the money we earn and spend, most Canadians have at least one chequing account with a financial institution. Here’s some information on how chequing accounts work, their associated fees and how to choose the right one for you.


What is a chequing account?

A chequing account is the most basic transactional bank account offered by banks, credit unions and small lenders. Chequing accounts are typically meant to serve as a transactions account. For example, most people have their paycheques from work deposited into a chequing account, then pay for purchases, services and their credit card bills with the money that’s in there.

The money in your chequing account is usually your most liquid asset, as it can be withdrawn at anytime without penalty1 . In exchange for that liquidity, chequing accounts usually offer little-to-no deposit interest. In Canada, any amount you deposit up to $100,000 is protected by CDIC insurance.


What types of chequing accounts exist?

A basic chequing account charges a small monthly fee to use the account and you are usually limited to a certain number of transactions each month. Typically, the smaller the monthly fee is, the fewer transactions the account includes. You can perform more transactions than what’s included, but you’ll pay a fee each time you do.

If you don’t want to be limited by the number of transactions you can make each month, you can also choose to get an unlimited chequing account. Depending on which lender you get an unlimited chequing account with, it may or may not come with a larger monthly fee ($12-15). Some lenders also offer no fee chequing accounts that come with an unlimited number of transactions.

Finally, many lenders also offer US chequing accounts, which allow you to deposit and withdraw American funds. These are great accounts for people who travel back and forth to the United States often enough, as you don’t need to constantly worry about exchanging funds each time you go.

What types of transactions can you perform with chequing accounts?

There are a number of different transactions you can perform with your chequing account, including:

  • Deposits (cash and cheques)
  • Withdrawals (at ATMs, bank tellers, in stores, etc.)
  • One-time payments for goods and services (groceries, clothing, food, etc.)
  • One-time bill payments
  • Pre-authorized payments (insurance, mortgage, rent, utilities, etc.)
  • Transfers (between two users of the same lending institution)
  • E-mail money transfers between two users of different lending institutions (both send and receive)

Summary of chequing account fees

Depending on which chequing account you choose and how you use it, you may have to pay any number of small fees. These include:

Fee What is it? How much?
Monthly Fee2 In order to use some chequing accounts, you may need to pay a monthly fee to the lending institution you open the account with Typically $3.95-14.95 per month, but there are also no fee chequing accounts that have no monthly fee and unlimited chequing accounts that are upwards of $30
Additional Transaction Fee If you have a limited number of transactions included in your chequing account plan, you may be charged a small fee per each additional transaction you go over the limit Typically $1 per additional transaction
Email Money Transfer Fee To send an email money transfer to someone, you will be charged a small fee; it’s free to receive email money transfers sent by someone else Typically $1-2 per transaction
ATM Withdrawal from Another Lender When you withdraw money from an ATM attached to another lender (not your own), you are usually “dinged” with a fee Typically $1.50-2.50 per transaction
Monthly Statement Fee To encourage more clients to go paperless, many lending institutions charge a small fee to print/send a copy of your monthly statement in the mail Typically $2-5 per month
Interim Statement Fee If you want to get a statement at any time throughout the month, you’ll have to see a bank teller and pay a fee to have it printed Typically $2-5 per month
Order Cheques Fee If you want to order a book of cheques linked to your chequing account, you will have to pay your lending institution for them to be printed/mailed to you Varies from lender-to-lender, but can get expensive. You could be looking at amounts up to: $1/cheque or $50 per 50 cheques
Non-Sufficient Fund (NSF) Fee If someone cashes a cheque you issued but you don’t have enough money in your chequing account, your lending insitution will charge you an NSF fee $45 per transaction at most lending institutions

Overdraft protection for your chequing account

One additional fee you may want/need to budget for each month is overdraft protection. If you’re concerned about having any unexpected shortfalls in your chequing account, and want to avoid dealing with NSF fees and returned cheques, overdraft protection can help. How? Well, it works one of two ways.

The first type of overdraft protection you can purchase is for “standard” coverage. If you know there’s a chance you’ll dip into your overdraft at least once each month, it’s worth paying a small monthly fee (usually $4-5.00) to have an extra cushion attached to your account, so you don’t run the risk of running out of money and having to pay the extra fees that go along with that (like NSF fees).

If you think there’s only a chance you’ll dip into overdraft “occasionally”, you can add that type of coverage to your account too. There’s no monthly fee for it, however, most lenders charge you a small fee for every day your account closes with a negative balance. Here’s an example where a lender charges a customer $5.00 per day for sitting in overdraft:

Day Transaction Amount Balance
1 Payroll Deposit $1,000.00 $1,000.00
5 Pre-authorized Payment $500.00 $500.00
9 Purchase $400.00 $100.00
10 Purchase $200.00 -$100.00
11 Overdraft Charge $5.00 -$105.00
12 Overdraft Charge $5.00 -$110.00
13 Overdraft Charge $5.00 -$115.00
14 Overdraft Charge $5.00 -$120.00
15 Payroll Deposit $1,000.00 $880.00

If the customer had chosen to purchase “standard” overdraft protection instead, they could’ve paid just $4-5.00 versus $20.00, for the 4 days they sat in overdraft this month.

How to choose the best chequing account

Before you even start using our chequing account comparison tool, it’s important that you identify your current banking habits and the number of transactions you know you’ll make each month. Ask yourself these questions:

  • How do you conduct your banking: mostly online or in-person? If you know you’ll need to go in-person, you may want to consider the bank’s business hours (some are better than others). If you do mostly online banking, you may also be concerned about whether or not your lender has a mobile app.
  • How often do you withdraw out cash from an ATM? If you do this regularly, you’ll want to find a lender who has ATMs close to your home, office, etc.
  • Now, ask yourself seriously: how many transactions do you make in a typical month? If you rarely use your chequing account, you could go with a basic chequing account. However, if you need an unlimited chequing account, don’t get turned off by a higher monthly fee – or look at some of the no fee chequing accounts, instead. Remember that if you got the basic account and performed more than the specified number of transactions it includes, you’d be dinged for every transaction you go over – and it adds up fast!
  • Once you know the answer to these questions, you can start comparing chequing accounts until you find the best one for you; this is when you can start to compare monthly fees and all the other transactional fees listed above, and ensure you get the best deal for your exact needs.


References and Notes

  1. Unless you have a limited number of transactions each month and go over
  2. Some lenders will waive the monthly fee, if you maintain a minimum balance (an amount identified at their discretion).