What Is a Chequing Account and How Does It Work?

A chequing account is a bank account designed for everyday money management. You can use it to receive income, pay bills, make purchases, withdraw cash and send money.

Unlike a savings account, a chequing account is generally built for frequent transactions rather than maximizing interest.

KOHO High Interest Savings

It is a prepaid Mastercard, so you spend your own money while still earning high interest.

With KOHO High Interest Savings, you can:

• Grow your savings up to 3.5% interest

• Earn a 2% cash back rate on groceries, eating, drinking, and transportation and 0.5% cash back on everything else

• Unlimited transactions and free e-transfers

• No minimum balance required, ever

How Does a Chequing Account Work?

Money is deposited into your account and becomes available for everyday transactions.

You might add money through:

• Direct deposit

• Interac e-Transfer

• Cash deposits

• Cheque deposits

• Transfers from another account

You can then use the available balance to pay for everyday expenses.

What Can You Use a Chequing Account For?

Common uses include:

• Receiving your paycheque

• Paying bills

• Making debit card purchases

• Sending e-Transfers

• Withdrawing cash from ATMs

• Paying rent or a mortgage

• Setting up automatic payments

It is usually the main account people use for regular spending.

Chequing Account vs. Savings Account

The biggest difference is how the accounts are designed to be used.

A chequing account is generally better for frequent transactions and everyday spending.

A savings account is designed to hold money you do not need immediately and may offer a higher interest rate.

Many people use both. They keep spending money in chequing and move savings into a separate account.

Do Chequing Accounts Earn Interest?

Some do, but many pay little or no interest.

If your main goal is growing money you are not currently spending, a high interest savings account may offer a better rate.

Compare the interest rate alongside any monthly fees or transaction limits.

Do Chequing Accounts Have Fees?

They can.

Depending on the account, you may pay:

• Monthly account fees

• ATM fees

• NSF fees

• Overdraft fees

• Transaction fees

Some accounts waive the monthly fee if you maintain a certain balance or meet other requirements.

Can You Overdraft a Chequing Account?

Possibly.

Overdraft protection may allow a payment to go through even when you do not have enough money in the account.

You then owe the amount used plus any applicable interest or fees.

Overdraft should generally be treated as short-term borrowing rather than extra spending money.

Do You Need a Chequing Account?

Not everyone needs a traditional chequing account, but you do need a convenient way to manage everyday money.

A chequing account can make sense if you regularly need to receive income, pay bills, send transfers and make purchases from the same account.

The main thing to compare is cost and convenience. Look for an account with the transactions you need without unnecessary monthly fees.