When you’re looking at what kinds of bank accounts you need, it’s important to understand your goals and what purpose each account serves. Chequing and saving accounts are important tools in managing your daily banking needs and it's likely you'll want to have both.

What is a chequing account?

A good way to think about a chequing account is as a spending account. It’s where you keep money for your everyday banking needs, such as depositing paycheques, paying bills, paying for daily expenses like groceries (since your debit card is usually linked to it), transferring money or making withdrawals. It’s a secure and convenient way to move your money around as needed. However, these accounts usually have fees and offer little or no interest. Your money won't grow, making it a less than ideal place to keep savings money you intend to build.

You might want to stick with one chequing account for all your daily needs, but you aren't limited to just one. For instance, you could have a joint account with a spouse to deposit your paycheques in and pay household expenses from, while keeping separate accounts for your individual spending needs. Depending on how you choose to budget, this might make it easier to track your different spending habits.

What is a savings account? 

A savings account is a great place to put money aside that you intend to grow, whether that’s for retirement, a larger purchase such as a vacation, or an emergency fund. As with chequing accounts, you might not want to limit yourself to just one. For instance, if you're saving for both a vacation and a wedding or home renovation, two savings accounts can help you keep track of those goals separately.

Savings accounts pay higher interest rates than chequing accounts allowing you to grow your money over time. There are often many options for savings accounts, from basic personal accounts to high-interest or premium savings accounts. You’ll want to compare savings accounts as some pay more interest and can help you reach your goals faster.

Usually there are no monthly account fees, although you want to keep in mind that there might be fees for transactions such as withdrawals or e-transfers outside of what's included with the account.

Each has a purpose

Think of a chequing account as one that serves your spending and budgeting needs for today – like small purchases and monthly bill payments – and of a savings account as one that serves your saving needs for those larger goals of tomorrow.

To help you make the best decisions with your money, see our article on how to choose between a savings account and chequing account.