Walking into a bank or credit union and being asked “what kind of account would you like?” can feel like being asked to choose from a menu in a language you half-speak. The names — chequing, savings, high-interest, money market, term deposit, registered, non-registered — all sound similar, but they behave very differently. Understanding which type fits which purpose saves fees and earns a little extra interest over time.
Chequing accounts — the day-to-day tool
A chequing account is designed for movement: direct deposits from an employer, bill payments, debit purchases, e-Transfers, and ATM withdrawals. Interest is typically zero or negligible. In exchange, you get unlimited or high-volume transactions, access to a debit card, and usually an overdraft facility for a fee.
Typical characteristics:
- Monthly fee ranging from $0 (basic plan) to $30+ (premium plan with travel insurance, identity theft coverage, etc.)
- Monthly fee often waived if a minimum balance is maintained
- Per-transaction fees on basic plans once the free allowance is used
- Interac e-Transfer typically included on most plans
- Interest rate below 0.5% in most cases
Savings accounts — the buffer
Savings accounts are designed for money you want to keep liquid but do not use every week. Interest rates are modest but higher than chequing, and most plans limit how many outbound transfers you can do for free.
When to use one:
- Emergency fund (typically 3 to 6 months of expenses)
- Short-term savings goals: down payment, vacation, planned purchase
- Holding money between paycheques before it goes into investments
High-interest savings accounts (HISA) are a variant offered mostly by online-first institutions. Rates are meaningfully higher — often 2 to 5 times a traditional bank’s rate — because the institution saves on branch infrastructure. The trade-off is fewer in-person services.
Money market accounts
Money market accounts blend features of savings and chequing. They pay interest close to HISA rates and allow limited chequing features (cheques, occasional debit). They generally require a higher minimum balance — often $5,000 or more — to avoid fees.
This type is less common in Canada than in the United States. When available, it suits people who keep a substantial cash cushion and want both interest and occasional transaction ability.
Term deposits and GICs
Guaranteed Investment Certificates (GICs) and term deposits lock money for a fixed period — from 30 days to 5 or 10 years — in exchange for a guaranteed interest rate. They are useful for money with a known use-date (a wedding next summer, a tax bill, a specific purchase).
Types commonly offered:
| Type | How it works | Typical use |
|---|---|---|
| Non-redeemable GIC | Fixed rate, locked in until maturity | Highest rate; money you will not touch |
| Cashable GIC | Can be redeemed after a waiting period | Slightly lower rate; safety of access |
| Market-linked GIC | Return tied to stock index performance, with a floor | Willing to accept variable return with protected principal |
| Escalating-rate GIC | Rate increases each year over the term | Multi-year hold, benefit from rising yields |
In Canada, GICs are eligible for CDIC coverage (at most institutions) up to $100,000 per category per member institution, so the principal is protected even if the institution fails.
Registered versus non-registered accounts
A separate dimension from the account type is whether it is registered with the federal government for tax purposes.
- RRSP (Registered Retirement Savings Plan): contributions are tax-deductible, withdrawals are taxable. Built for long-term retirement savings.
- TFSA (Tax-Free Savings Account): contributions not deductible but all growth and withdrawals are tax-free. Flexible for any goal.
- RESP (Registered Education Savings Plan): for a child’s education, with government grants adding to contributions.
- FHSA (First Home Savings Account): combines features of RRSP and TFSA, designed for first-time home buyers.
Almost any account type (savings, GIC, brokerage) can be registered under one of these shells. The choice between registered and non-registered depends on your tax situation and what the money is for.
Matching account type to purpose
A common-sense structure for most people:
- One chequing account for day-to-day operations
- One HISA for the emergency fund and short-term goals
- A TFSA (holding cash, GICs, or investments) for medium-term savings
- An RRSP if you have employment income and are saving for retirement
- A GIC ladder if you have predictable large future expenses
Avoid common mistakes: leaving emergency cash in a chequing account earning 0%, holding long-term savings in a HISA instead of investments, or opening several accounts across multiple institutions without tracking fees.
What CDIC deposit insurance covers
In Canada, the Canada Deposit Insurance Corporation (CDIC) insures eligible deposits at member institutions up to $100,000 per category. Categories include personal chequing/savings, joint accounts, RRSPs, RRIFs, TFSAs, and trust accounts. Credit unions are often covered by provincial equivalents such as FSRA in Ontario with similar or higher limits.
Confirm coverage before depositing large sums. Holding more than the insured amount at one institution concentrates risk unnecessarily — spreading across institutions is a simple safety step.