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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Generally speaking, a checking account is meant for you have quick access to your money on a regular basis. There are typically no withdrawal limits but you get no interest. In other words, it’s an account you keep money moving into and out of a lot for things like paying bills, making purchases…etc.
A savings account is more of a place to park you money for a longer period of time. In other words, it’s a place to *save* your money. They typically have transfer limits so you can’t constantly be making deposits or withdrawals, but they money accrues interest as it sits in the account. The interest is very small, but it’s interest nonetheless.
This is not financial advice for you, so do not take it as such, but for the average person, it’s generally ideal to keep some amount in your checking account at all times to cover your regular purchases and expenses, and then keep the rest in savings. Then you can move money from savings into checking every so often to keep enough money in your checking account.
Note that the above is just the general rules. You should check with your bank to find out the specifics of how each account works at that bank and what kinds of rules, restrictions, and benefits they have on each type of account.
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