How to choose a bank account in Canada

Start with how you use your money

To choose a bank account in Canada, start with how you actually use money: how many payments you make each month, how much you usually keep in the account, and whether you need a branch nearby. Then compare a few things: fees, deposit protection, interest and how easy it is to send an Interac e-Transfer. The right account is the one that fits your habits at the lowest real cost.

Chequing and savings do different jobs

A chequing account is for everyday money. Your pay goes in, and bills, debit purchases and e-Transfers come out. It usually pays little or no interest. A savings account is for money you want to set aside. It usually pays more interest but may limit or charge for withdrawals. Many people keep both, so savings are not mixed with spending. You can also hold savings inside a TFSA, where interest grows tax-free.

Fees and how to avoid them

Fees are where accounts differ most. Look at the monthly fee and how many transactions it includes. Many banks waive the fee if you keep a minimum balance, but check the fine print, since dipping below it for a single day can trigger the charge. Ask about low-cost or no-cost options for students, youth and seniors. Also check fees for overdraft, NSF (insufficient funds) payments, paper statements and using other banks’ ATMs.

Deposit protection: CDIC and provincial insurers

The Canada Deposit Insurance Corporation (CDIC) protects eligible deposits at its member institutions if one fails. Coverage is free and automatic, up to $100,000 per insurance category at each member. It covers savings and chequing accounts and term deposits like GICs, including foreign currency deposits. It does not cover stocks, bonds, mutual funds, ETFs or crypto. You can check whether a bank is a member on cdic.ca.

Credit unions and caisses are usually covered by a provincial deposit insurer instead of CDIC, with their own rules. Some fintech apps and brokers offer accounts that are protected through a partner institution. If you are not sure, ask the provider exactly who holds your money and which insurer covers it.

Interest: look past the headline

A high advertised interest rate can be a promotion that lasts a few months, then drops. Some offers only apply to new money or to balances above a certain level. Read how interest is calculated and when it is paid. Also remember that interest earned in a regular savings account is taxable income. Holding the same savings inside a TFSA can keep that interest tax-free, within your contribution room.

e-Transfers, apps and everyday convenience

Check whether Interac e-Transfers are included, and whether there is a monthly limit or a fee after a certain number. Autodeposit is handy if friends often send you money. Try the bank’s app if you can, since you will use it far more than a branch. Look at ATM access, customer support hours and how easy it is to deposit a cheque by photo. If you switch banks later, plan time to move direct deposits and pre-authorized payments.

Questions

Is my money safe in a Canadian bank account?

Eligible deposits at CDIC member institutions are protected up to $100,000 per insurance category, for free and automatically. Credit unions are usually covered by a provincial insurer instead.

Should I have a separate savings account?

Many people find it helps. Keeping savings apart from your chequing account makes it less tempting to spend them and easier to see your progress.

How do I avoid monthly bank fees?

Options include keeping the minimum balance your bank asks for, choosing an account with no monthly fee, or asking about low-cost accounts for students, youth and seniors.