How to choose between a checking account and a savings account?

Choosing between a chequing account and a savings account often causes confusion for newcomers to Canada. In fact, they are not alternatives: most Canadians use both types of accounts for different purposes. A checking account becomes a financial “control center” for everyday transactions, while a savings account serves as a tool for accumulating funds at interest and achieving financial goals.

The main difference between a checking and savings account

A checking account is designed for everyday transactions: receiving paychecks, paying bills, making card purchases, withdrawing cash from ATMs, and sending Interac e-Transfers. It provides easy access to money but typically does not earn interest or offers a meager 0.01-0.10% per year.

A savings account is designed to hold money you don't need on a daily basis and earn interest on the balance. Current rates for high-yield savings accounts (HISAs) range from 2.5% to 5% per year, depending on the bank and promotional offers. However, these accounts have limits on the number of transactions per month and may charge fees for exceeding limits.

Comparison table: checking vs. savings

How fees and interest work

Checking accounts: fee structure

• Basic accounts — $3.95–4.00 CAD/month, 12 transactions, $1.25 per additional transaction.
• Mid-range packages — $11.95–16.95 CAD/month, 25–60 transactions or unlimited, fee waiver with a balance of $3,000–4,000 CAD.
• Premium packages — $25-30.95 CAD/month, unlimited transactions, free international ATMs, additional benefits, no fees with a balance of $5000-6000 CAD.

Savings accounts: how to earn interest

High-yield savings accounts use compound interest. Promotional rates:

• Scotiabank MomentumPLUS — up to 5% for the first 90 days.
• CIBC eAdvantage — 4.90% for the first 3 months.
• Tangerine — 4.50% for the first 5 months.

Specifics of provincial and local banks in Calgary

ATB Financial: Alberta advantages

• Unlimited transactions with a balance of $2,000 CAD.
• HISA — 2.30% per annum.
• Local solutions, faster responses.

Servus Credit Union: a cooperative approach

• Profit sharing for members.
• $3.95–16.95 CAD/month, 15–60 transactions, free with a balance of $4,000 CAD.
• Flexible lending.

Online banks: an alternative to traditional institutions

Tangerine and Simplii

• Tangerine — No-Fee Daily Chequing, up to 4.50% on HISA for the first 5 months.
• Simplii Financial — 4.25% on HISA for the first 4 months, free e-Transfers.

Disadvantage — no branches.

Account combination strategies

Basic “two accounts” scheme

Checking account at a large bank + HISA at an online bank.

Extended “multiple goals” scheme

• Main checking account.
• Emergency HISA.
• Targeted savings accounts.
• TFSA investment account.

Practical tips for newcomers

First steps

Open a checking account at a major bank with a program for newcomers. After 2-3 months, add a HISA.

Automate savings

Automatically transfer 10-20% of your salary to a savings account.

Monitor fees

Track transactions to avoid exceeding limits.

Special cases and exceptions

• Students — free student accounts (CIBC, TD, BMO).
• Seniors — discounts (ATB 59+ Banking, Servus Senior Unlimited).
• Multi-currency needs — USD accounts (ATB, RBC, Scotiabank).

Conclusion

You need both accounts: a checking account for daily transactions and a savings account for passive income. Combine products from different banks, take advantage of promotions, and review the terms and conditions regularly.