What's the difference between a chequing and a savings account?
When it comes to managing your money, it's all about having the right tools. And one of the best tools you can have is a bank account.
Updated 
8 min. read
A chequing account is designed for everyday transactions like regular purchases, bill payments, and receiving deposits.- A savings account can help your money grow through interest, making it ideal for short to medium-term goals and emergency savings.
- Using both accounts together is an effective way to manage day-to-day spending while building savings over time.
One of the most fundamental steps to taking control of your money is opening a bank account. But does it make sense for you to open a chequing account, a savings account, or both? To help you decide, let’s break down their differences and explore the pros and cons.
But first, what’s the actual difference? Here’s the short answer: the main difference between a chequing and savings account is that a chequing account is designed for day to day spending, while a savings account is designed to help you set money aside and earn interest.
Understanding the purpose of each account, and how they can work together, is helpful in managing your finances effectively. And whichever you choose, both BMO chequing and savings accounts are protected by the CDIC (Canadian Deposit Insurance Corporation) for up to $100,00 per depositor, per insured category.
What is a chequing account?
A chequing account is your go-to for everyday transactions, whether depositing money (e.g. cash deposits, cheques, or direct deposits) or making withdrawals for day-to-day expenses like groceries, meals, gas, and other basic necessities. You can also pay bills, send Interac e-Transfers®§, withdraw cash from ATMs with a debit card, and manage your other banking needs.
BMO offers various types of chequing accounts with a host of features and benefits.
Tip: Eligible monthly chequing account fees may be waived if you maintain a minimum daily balance.
Pros and cons of chequing accounts
Pros
- Supports a high volume of monthly transactio
- Easy to set up direct deposit for your paycheques
- Typically comes with a debit card for in-store and online purchases
- May include special discounts on eligible credit cards or discounted banking programs
Cons
- Offers little to no interest on your account balance
- Usually charges monthly fees
What is a savings account exactly?
How much should I keep in a savings account?
There’s no universal answer to how much you should keep in your savings account. The right amount for you depends on several factors, including your income, expenses, savings goals, and the account itself.
Pros and cons of savings accounts
Pros
- Earns interest on your balance
- Provides easy access to your money
- Ideal for building an emergency fund
- Your balance isn’t affected by market volatility
- Easy to set up automatic deposits
- Works toward short- and mid-term financial goals
Cons
- Not suited for everyday spending due to limited free transactions per month
- Can’t typically be used to write cheques or make debit purchases
Chequing accounts | Savings accounts | |
|---|---|---|
Transactions | Often unlimited | Typically limited per month |
Withdrawals | Usually unrestricted | May have restrictions |
Monthly fees | Typically apply (but may be waived with conditions) | Often none |
Interest | Little to none | Earns interest, with rates that vary by account and institution |
Access | Easy access via ATM, branch, or online | Accessible but designed to discourage frequent spending |
Debit card | Yes | Not typically |
Cheques | Suported | Not supported |
Best for | Everyday spending and bill payments | Building savings and reaching financial goals |
Why you need both a chequing and savings account
Chequing and savings accounts aren’t an either/or decision. Combining their power can make it much easier to manage your finances. You can think of your chequing account as where your “right now” money lives for handling present-day needs like paying bills, receiving paycheques, and making everyday purchases. On the other hand, your savings account handles the future: growing your nest egg, achieving financial goals, and handling unexpected expenses.
While both accounts prove helpful in these distinct ways, they can also work together. For example, you can set up automatic transfers to move a little money from your chequing to your savings each month. This makes budgeting a lot easier as you can treat it as a predictable monthly expense, plus you can even set up alerts to give you a heads-up if you start running low on funds.
Let’s say you set up an automatic transfer of $100 from your chequing account to your savings account every two weeks (to match up with payday). In one year, you could save up to $2,600 plus interest!
When you’re ready, signing up for a new bank account with BMO is quick and easy, with limited time special offers and promotions available for you to take advantage of.
Tip:You can open multiple chequing and savings accounts without paying an extra fee with the BMO Family Bundle through qualifying accounts.
