So I had a meeting with a financial advisor not long ago, and she strongly recommended i set up a chequing account for my payroll to go into, as opposed to it going directly into my savings account like it always has been. I said yes without really thinking it through, but…before I talk to HR about where they deposit my payroll, what is the difference between a chequing account and a savings account? This is for Canadian banking btw.
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These days? Very little.
Theoretically, a savings account has limited access and the slower cash movement means the balance is more predictable for the bank so it’s less risky for them to use it for lending purposes. In turn that means they can offer interest on however much you have stashed in the savings account.
That worked fine until the rise of e-banking. If you had to actually go to the bank to move funds around you’re just not going to very often, but if it’s just log in and hit a button? Yeah.
Interest rates on savings accounts, if that bank even offers it at all, are generally pretty low. You can get better rates in truly limited access bank products like CDs (certificate of deposit) or products with a high minimum balance requirement (like most Money Market accounts)
These days the biggest difference between a checking account and a savings account is that you can get a debit card issued for your checking account. Check with your bank to determine if there’s any more restrictions on a savings account.
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