How to choose a chequing account in Canada

You carry your mobile phone with you every day, and you have carefully chosen a package that meets your needs. You don’t want to overpay, and you definitely don’t want to incur data overage charges. Picking your chequing account should be treated with the same respect, as choosing the wrong account could cost you dearly. Here’s what you need to consider before using Hardbacon’s chequing account comparison tool to select yours.

Understand your financial habits to make the right choice

A chequing account offers a secure and convenient solution for managing daily expenses and paying short-term bills. Available at most banks and credit unions, these accounts allow flexible deposits and easy withdrawals. A chequing account is essential, if only to receive your pay and pay your rent!

The first step in choosing the best chequing account is to evaluate your financial habits. Take a moment to think about how often you use your account, the average balance you maintain, and the types of transactions you commonly make. Understanding your spending habits will help you identify features that suit your needs, like unlimited transactions or a high interest rate on your balance.

Additionally, if you belong to certain customer categories, such as students or seniors, you could get discounts. For example, plans aimed at post-secondary students generally offer no-fee accounts and require no minimum balance. Take the time to select the right categories in our chequing account comparison tool, as shown in the image. Obviously, you must meet the eligibility criteria. If, like many of us, you are neither young nor old, try to find out about offers based on your profession.

How much do you want to pay for your chequing account?

The majority of consumers would rather pay the lowest possible fees. I know this is my case! My way of doing things is to maintain a minimum balance in my account at all times, but many people turn to online banks. What will you decide? Do you have the ability to maintain a minimum balance in your account to avoid these fees? Do you make a lot of transactions? Are you prone to non-sufficient funds (NSF)?

Monthly and transaction fees

Chequing accounts come with various fee structures, such as monthly fees or fees on certain transactions. Several banks, like Tangerine, offer accounts with no monthly fees or transaction fees. Others charge more or less $10 per month, sometimes more, depending on what is included. But $10 per month is $120 per year!

These fixed fees can be waived if you maintain a minimum account balance, often between $2,000 and $5,000. Generally, the higher the monthly fee, the more inclusions the plan will have: unlimited transactions, free bank drafts, overdraft protection, personalized checks, etc. Ask yourself if you really need all of this.

You have to be very careful with the number of transactions (deposits, withdrawals, bill payments, etc.). Fifteen transactions per month may seem acceptable to you when you read it on their website, but chequing accounts are quite useful everyday and you may need more. For my part, by putting almost all of my expenses on a credit card, which I pay once a month from my chequing account, I considerably reduce the number of transactions I make. If you have a high volume of transactions, opting for an illimited transactions account will likely be more economical in the long run, even if the monthly fees are higher.

When you use our chequing account comparison tool, you can choose a sorting preference between monthly fees, transaction fees, number of transactions and promotional offers.

Overdraft Protection

Life is unpredictable and financial emergencies can arise. In the fall of 2023, the Canadian government announced that banks would no longer be able to charge outrageous NSF fees. That’s excellent news! These fees were often as high as $40 or $50. Make sure the change is actually implemented at a bank before opening a chequing account there.

Do not neglect service and accessibility

Access to ATMs is a crucial consideration, especially if you frequently withdraw cash. Choose a chequing account with a wide network to avoid additional fees when using ATMs owned by another bank. We are talking about fees between $1.50 and up to $9.00 each time you use one. Some banks which do not have the advantage of having such a network sometimes reimburse these fees, as is the case with EQ Bank.

Sometimes an ATM does not meet our needs and we need to speak to someone face to face. Does the bank you are considering have branches near you? This is very practical for obtaining a more personalized service. Also, make sure the opening hours fit your schedule. Going to your bank on the day you’re available to do so and realizing it’s closed would be annoying.

In the digital age, however, the convenience of online and mobile banking cannot be overstated. Evaluate the features offered by different banks, such as mobile check deposit, bill payments and account alerts. A user-friendly, feature-rich online banking platform can improve your overall banking experience.

Finally, think about the quality of customer service provided by the bank. A responsive and efficient customer service team can make a significant difference in resolving issues and responding to concerns quickly. Read reviews, ask for recommendations, and assess the bank’s reputation for customer service.

Earn interest on your balance

What if, in addition to paying no monthly fees, you could also earn interest on your balance? I’m not talking about a savings account, but a chequing account. The last few years have accustomed us to a meager 0.1%, or even less, on the money we leave in our account. Are you one of the Canadians who are increasingly dissatisfied with the Big Five banks? The low interest paid is certainly one of the criticisms I have towards them.

While chequing accounts don’t typically offer high interest rates, newer players offer great interest on your balance, like Neo and KOHO. Rates can reach 5%, which means that by having a balance of $1,000, you earn $50 per year. It’s better than nothing!

Banks, credit unions and other account providers

In a complex financial landscape, choosing the right chequing account can be a daunting task. With many banks offering a variety of options, each claiming to be the best, it is crucial to carefully evaluate your needs and preferences.

There are several advantages to moving away from large reputable banks and cooperatives like BMO and Scotiabank, which often charge higher fees and pay less interest than other financial companies like Neo. Often, these also offer a card associated with the account, which can serve as a debit card and also as a credit card for online purchases. Despite their advantages, ask yourself if you are comfortable in doing business with these new players before opening an account with them.

I won’t judge you for choosing the sense of security that a large institution promises; that’s what I did! Do you trust this company? Are your funds protected by the Canada Deposit Insurance Corporation? Have you carefully assessed the fees to be paid, if any? Will they be able to meet your future needs?

What will be your financial needs in the future?

You may need additional services in the future. If you eventually want to take out a mortgage or ask the advice of a financial planner and want to consolidate all your accounts under one roof, deepen your research to check what the desired institution offers. Please note, however, that you don’t have to put all your eggs in one basket. Sound management of your personal finances consists of looking for the best offers, whether they’re from the same financial institution or not.

Choose the chequing account that best suits you

The answer to the question “how to choose a chequing account?” is actually quite simple. Check which accounts suit your lifestyle, estimate the number of transactions you make every month and consult Hardbacon’s chequing account comparison tool. Before making a final choice, check if there are branches near you. Do your best to predict your present and future needs and you will be able to choose the ideal chequing account.