Chequing and savings accounts: Finding the right balance for your money

Have you reached the point where a piggy bank is no longer a suitable option for your cash? Understanding how to manage your money begins with knowing the best place to put it. Your bank is here to help!

Banks offer various account types that serve different purposes— like paying bills, building savings and reaching financial goals. Two of the most common are chequing and savings. Ideally, everyone should have both, but it helps to know the benefits of each and the differences between them.

Read on to learn how to use your chequing and savings accounts to get the most out of your money.

A chequing account is the bank account you use for your everyday transactions. These include depositing paycheques, paying bills, transferring money online or making automatic banking machine (ABM) withdrawals.

You’ll receive a debit card connected to your chequing account and sometimes a small number of paper cheques. A debit card is similar to a credit card in that you can use it to make purchases, but it withdraws the money directly from your chequing account. The debit card also allows you to access the money in your chequing or savings accounts from automatic banking machines (ABMs).

A savings account is a great way to store money safely and accessibly. It also tends to earn higher interest rates than a chequing account. You can easily transfer money between them online, over the phone, through the bank’s app or at a branch.

Unlike a chequing account, a savings account is generally not used for everyday transactions, like paying bills or cashing cheques.

Debit transactions involve withdrawing money from your account, such as getting cash at an ABM, writing a paper cheque, making an Interac e-transfer, purchasing with your debit card or paying a bill.

A chequing account generally allows more debit transactions per month without additional fees. Some accounts even offer an unlimited number of debit transactions.

With a savings account, there may be fees (such as service charges) connected to making debit transactions.  

Most chequing accounts need a minimum balance of deposits or they charge a monthly account fee. The amount you pay depends on the type of chequing account and the services offered. For example, you might pay more for accounts that include more monthly transactions or perks like fee waivers for credit cards.

While savings accounts usually have no monthly account fees, service charges may apply when you make a debit transaction. 

Some chequing accounts pay interest, but it’s usually minimal. Savings accounts offer higher interest rates than chequing accounts, so you can make more on the money you leave in there.

Different kinds of savings accounts offer different rates. For example, a high-interest savings account (HISA) offers higher interest rates than a regular savings account, but there may be rules around how long you need to leave the funds in place to earn interest. 

That depends on you and your financial needs. Generally, a chequing account is best for everyday expenses, while a savings account works better for growing your money. Let’s take a closer look.

These numbers are different for everyone and will vary with age. Your account balances will depend on your income, expenses and current and long-term financial goals.

The amount you should keep in your chequing account is determined largely by your everyday expenses, such as rent or mortgage, bills, food and transportation. You want to maintain enough to cover these costs and keep a little extra available for unexpected charges. Padding your account helps avoid non-sufficient fund (NSF) fees, which can happen if there is not enough money in your account to cover a cheque or pre-authorized debit.

Ideally, additional funds you receive or earn should be kept in your savings account. Your financial goals will change as you enter different stages of your life, and a savings account is a great place to start putting that money away for your future.

If you’re looking to grow your savings, it helps to make a budget so you have a better idea of where you are spending and where you could be saving. Get help with real-time money management, including budgeting, with Scotia Smart Money by Advice+.*

There are also two smart savings tools by Advice+ that you can use to help reach your savings goals, available on the Scotiabank mobile app. These tools can help you reach your goals by automatically moving small amounts of money into your savings account (you will need to have both an eligible Scotiabank chequing account and the Money Master Savings Account). You can only enrol in one of these tools at a time: 

1. Pay Yourself First is a tool that helps you set up automatic transfers from your eligible recurring deposits¹, like payroll, right into your Money Master Savings Account. You set the amount or percentage, and this tool monitors your spending patterns, expenses and incoming funds and then moves money when it appears you can afford it.² The tool won’t ever transfer more than the maximum amount or percentage that you set up. Another benefit is an ongoing interest rate boost³ on top of the regular interest rate⁴ you receive on your Money Master account. 
2. Savings Finder is a tool that looks at your source of income and cash flow to find ways to save small amounts here and there from your chequing account into your Money Master Savings Account when it appears that you can afford it.⁵ You set the monthly savings target, and Savings Finder will do the rest. The Savings Finder will never transfer more than the target that you set.  Like with the Pay Yourself First tool, you will receive an ongoing interest rate boost3 on top of the regular interest rate4 you receive on your Money Master account.  Learn more here.

Chequing and savings accounts can work together as essential money management tools. Having both will help you simplify household bookkeeping, control your spending and track your savings. For more financial and investment advice, book an appointment with a Scotia advisor, who can help you understand the options and create a personalized financial plan that works for you.