While “checking account” is most commonly used by Americans, “checking account” is primarily used in the Canadian banking system.
Both “Chequing” and “Checking” are recognized in Canada, but the former is more widely accepted across the country, even though the latter is the original British English spelling.
Do you want to know what is the most fun?
In the UK and Australia, you do not hold a “checking” account, but a “checking” account.
So basically “verify” addresses the US as “Cheque” is in Canada and for the purposes of this article, I would use the term “check” more often.
What is a checking account?
A checking account is simply a deposit account that allows both withdrawals and deposits and is owned and operated at a financial institution.
It is a kind of bank account that you can use to monitor and manage your cash flow from time to time on a regular basis. This is an essential aspect to consider for a healthy and financially stable life.
Additionally, checking accounts are very liquid and can be managed with checks, automated teller machine (ATM), electronic debits, bill payments, electronic deposits, to name a few.
How does a checking account work?
Checking accounts can also be called transactional accounts or current accounts.
One striking difference between a checking account and another bank account is the number of withdrawals and deposits allowed.
A checking account allows unrestricted deposits and multiple withdrawals, while a regular savings account places a limit on both most often. The tradeoff for the high level of liquidity is the interest earned – a checking account does not offer its holders as much interest as other bank accounts.
Also note that it is important to keep a proper record of checking account fees because they are scrutinized for overdrafts, writing too many checks, and sometimes letting the balance fall below the standard minimum.
Checking accounts may include, but are not limited to:
Do you need a checking account?
You may be wondering which group of people are eligible for a checking account. Well, here’s your answer: everyone!
No matter who you are, no matter what type of job you have, no matter the size of your business, there is a checking account for you.
Well, actually, you can open a checking account at any bank branch nearest to you or through a financial institution’s website or other online platforms.
After or during the creation of the account, you will be duly guided on what to do and what not to do, but in the true sense, you should not worry about what not to do as the checking account has little or no restrictions at all.
For fund deposits, you can achieve this through direct deposit using ATMs or even over the counter.
And also, to access your funds, you can either write a check, use the ATM or use your electronic debit or credit cards linked to your account.
Checking account vs. Savings account
In this section, let’s take a quick look at the differences between a checking account and a savings account.
Using a checking account has become very convenient thanks to the improvement and technological development of electronic banking services.
You can now pay transactions and utility bills through electronic platforms, eliminating the need to write and send paper checks like in the old days.
Better yet, in addition to making deposits or transfers, you can now set your smartphone to automatically pay for your regular monthly expenses.
Additionally, if your checking account has a relatively large balance, banks often offer a “swipe” service to regulate the balance.
This involves removing all excess cash from your account and investing it in interest-bearing funds overnight and/or instantly. These can be treasury bills, bonds, etc., and at the beginning of the next business day, the funds are returned to the checking account along with the interest earned.
Whereas when it comes to a savings bank account, it is quite simple to understand.
You will need a savings account to park your funds in a safe place. As simple as that. Savings accounts are usually just meant to park your money and you have no use for them.
For example – You can park your emergency funds in a savings account. Because you will only touch it in an emergency.
Some Canadian banks such as Tangerine, Motusbank, EQ Bank and others pay you a small interest fee for keeping your money in what we call a high interest savings account or HISA account.
I have covered the topic of the best HISA accounts you can open in Canada at length.
Well, remember that HISA accounts can be opened without an annual fee and you can easily transfer money from one bank to another.
For example, let’s say EQ is only an online bank, so in that case you can transfer your money to CIBC or TD and complete the transactions. Additionally, online banks offer free Interac e-Transfers to make your transactions easier and more convenient.
Types of Chequing Accounts in Canada
There are many types of chequing accounts in Canada and each of them has its own distinctive feature, but in general, they work essentially the same way.
The reason for this classification is simply to look at each of them and say how they differ from each other.
Well, from time to time it has been observed that every checking account differs in terms of price and terms.
Let’s take a look at the five types below:
1. Personal checking account
This is undoubtedly the most common and basic type of checking account operator in Canada. It is managed by one person and meets all their financial needs.
This is the easiest checking account to open and it is highly advisable to start with a personal checking account if you are still new to the industry.
2. No-fee checking account
This is a no-fee checking account. This guy is relatively new to the bakery system and has caused a lot of suspicion and raised eyebrows. Frankly, many people still don’t believe in the concept of a no-fee checking account and have dismissed the idea.
But interestingly, it is widely used in the country and has brought immense benefits to those who use it. These accounts offer a completely different approach to banking and investing, free and beneficial for those who manage such accounts.
In addition, the no-fee checking account is a complete package that has no monthly or annual fees, unlimited transfers and electronic transactions, among others.
Another distinct feature is that accounts are usually provided by digital banks which likely do not have physical branches but operate exclusively online. If you are a customer of this type of bank, you can access the ATMs of another bank belonging to the same ATM network.
3. Checking account earning interest
This is a hybrid checking account, meaning it combines the features of at least two different accounts to form its own features. It is also known as a high interest checking account or hybrid bank account.
Now here’s the juicy part, it’s a checking account that offers an interest rate of return greater than 1.05%. Too good to be true, right?
Additionally, on rare occasions, this checking account combines the flexibility of a normal checking account with high interest rates. Please note that Canadian banks do not very often offer checking accounts earning interest above 0.5%, but fortunately other options exist.
4. Joint checking account
This type of checking account is operated by two or more people, as opposed to a personal checking account which only allows one person.
It offers a different type of flexibility that allows multiple account holders to use the same checking account. This type of account will be useful if you are managing a partnership with other people, it would grant all partners equal rights to the account.
Plus, this could be the ideal checking account for you and your spouse; This would give you both the opportunity to save and equal rights for withdrawals.
5. Student checking account
Last but not least, there is the student checking account. So, if you are in school or have children in school, this is surely your best option to open an account. But note that it is only suitable for students enrolled in post-secondary schools.
These checking accounts are completely free and generally do not create privileges on the number of transactions that can be made. It also comes with some benefits like rewards programs, scholarship competitions, discounts, etc.
Additionally, if you are asking what is the best type of student account to create for your child or ward, I would say that it largely depends on the institution they are attending or planning to attend.
But in general, they all offer good services and come with many benefits, so do well to open a student checking account for your child/ward.
How to choose the right checking account for your needs?
There are many factors to consider when choosing the right checking account for you, your spouse, your children, or even the type of business you operate.
The following factors have been carefully outlined to help you in your decision-making process:
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Monthly Fee: Most checking accounts, except for no-fee accounts, have a mandatory monthly fee. You may want to take this into account when making your decision.
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Transaction Limit: If you make a lot of transactions each month, an account with unlimited transactions might be your preferred option.
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Customer Service: You may want to consider an account with excellent customer service.
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Overdraft Protection: Opening an account with this option can help you avoid paying unnecessarily costly fines.
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ATM network: If you withdraw money often, choose a checking account with an ATM network near the places you frequent.
Last words
So there you have it, that was my take on the “checking account”. This is a relatively simple topic, but with so many immigrants arriving in Canada every day, let me write about it.
Especially if you are from South Asian countries like India, we have never heard of the term “checking account” since you were born. All we know is the savings account and deposits. I use my space here to make sure everyone understands what checking accounts are in detail and help everyone.
I will write more about these basic topics in the coming days because I think the basics are very important and not just product reviews or credit cards for example.
Either way, if you enjoyed the content here and found it helpful, please share it on social media and help spread the word. Also let me know your comments below.
Thanks for reading! Bye now.
