Bank account types: What’s the best bank account?

There are many types of bank accounts in Canada, including chequing, savings, high-interest savings, and specialized accounts, such as joint bank accounts and student accounts. Which one is best for you? To decide that, we want to look at interest, flexibility, and fees.

But first, understanding the various types of bank accounts can help you avoid unnecessary fees and meet both your daily banking needs and long-term financial objectives.

Let’s walk through the most common bank accounts in Canada and highlight the key features. That way, you can make a confident, cost-effective choice for an account that best fits your needs. 

Common types of bank accounts

No matter your age or financial situation, there’s a bank account that can help you manage your finances more easily. Here’s an overview of the most widely used bank accounts in Canada.

Chequing account

About 97% of Canadians have at least one chequing account. Chequing accounts provide easy access to funds for everyday expenses. Chequing accounts rarely pay interest because they’re meant for transactions. They’re typically used for paying bills or buying groceries, rather than earning interest.

Savings account

Unlike a chequing account, a savings account can help you build savings over time. In Canada, though, savings accounts typically offer a modest interest rate, from 1% to 2.5%. This account is best for short- and medium-term goals, such as saving for a vacation (short-term) or building an emergency fund (medium-term). 

In Canada, most savings accounts are highly liquid, especially digital ones. You can access the money, but check the fine print, as there may be limits on monthly withdrawals and transfers. 

Hybrid accounts

This is the marriage of a chequing account and a savings account: paying interest and low fees for transactions. 

Some banks offer chequing and savings features in one account, but shop around for other perks. For example, Neo Financial’s Everyday Account offers cashback rewards and automated savings. This allows you to earn cash rewards when you buy using the card.

Learn about the Neo Everyday Account.

High-interest savings accounts

HISAs, also known as high-yield savings accounts, offer higher interest than a regular savings account, while keeping your money liquid, meaning you can make a withdrawal anytime. HISAs are ideal for saving money and long-term goals, but rates can move up or down with the Bank of Canada key interest rate and promotional offers. You can use this to create an emergency fund.

Registered accounts

Registered accounts are special savings or investment accounts that follow rules set by the government to give you tax benefits. They’re “registered” because the government tracks them for tax purposes, and they can help you save for big goals like school, retirement, or buying a first home.

Some examples include:

• RESP (Registered Education Savings Plan): Helps families save for a child’s education with government grants.
• RRSP (Registered Retirement Savings Plan): Lowers your taxes while you save for retirement.
• TFSA (Tax-Free Savings Account): Lets your money grow tax-free for any goal.
• FHSA (First Home Savings Account): Lets first-time homebuyers save with tax advantages.

Many Canadians use registered accounts for cash savings, but these accounts can also be used for holding investments like stocks, bonds, mutual funds, or exchange-traded funds (ETFs) to help your savings grow faster.

Specialized bank account options

In Canada, there are accounts specifically for students, seniors, and business owners. Each type of account can serve you in different ways, depending on your lifestyle and financial goals.

Joint bank accounts

A joint account allows multiple people to access the money. It’s often used for shared expenses, but note that both account holders are equally responsible for the account. This means that if one person overspends or misses a payment, both account holders’ credit and finances can be affected. 

On the positive side, joint accounts can make it easier for couples or families to manage shared goals, like saving for a vacation or covering household bills together.

Student bank accounts

Around 70% of Canadians open their first bank account before the age of 18. Student accounts are great for students who have saving goals at an early age. It usually comes with low- or no-fee offers. 

Neo Financial, for example, offers the JA Money card for youth, provided they’re at least 13 years old (or 14 years old if living in Quebec). There is no official maximum age, but it’s designed for teens and young adults.

Senior/pensioner accounts

Senior accounts typically waive monthly fees and may offer better interest rates than standard chequing accounts. These specialized accounts sometimes include additional benefits, such as discounted banking services, lower transaction fees, or even perks with select partner retailers. 

Eligibility varies by provider, but it’s often based on age (usually 60 or older), Canadian residency, and receipt of the Guaranteed Income Supplement (GIS).

Business bank accounts

Business accounts help business owners separate their personal and business finances. That can include features such as payroll, invoicing, expense tracking, and multiple user access. It’s also perfect for business transactions, as it can help manage cash flow and tax needs efficiently.

Big Banks vs fintechs

Big Banks offer in-person services, including face-to-face support with a teller, cash deposits, and assistance with complex requests or transactions, like wire transfers or certified cheques.

Fintechs like Neo Financial, on the other hand, are digital-first. They often provide lower (or no) monthly fees, higher interest rates on savings, and mobile-first features.

Bank account features in Canada

Customer support

Fintechs: In-app chat, phone, and digital-first service

Big Banks: Full-service support (in-person, phone, and online)

Fees

Fintechs: Low or no monthly fees

Big Banks: Monthly fees are common, though many banks waive them if you meet conditions (like maintaining a minimum balance or setting up direct deposit)

Interest rate

Fintechs: Competitive, often among the highest in Canada

Big Banks: Typically lower than digital banks/fintechs, though sometimes bundled with promotions or packages

Cash deposit

Fintechs: Sometimes available via partner ATMs and digital tools

Big Banks: Branches and ATMs

Technology Dependence

Fintechs: Mobile-first onboarding and account management

Big Banks: Strong digital apps plus branch access

Convenience

Fintechs: Anytime, anywhere

Big Banks: Blend of digital convenience and branch access when needed

Aside from Big Banks and fintechs, Canadians also have access to credit unions, which are member-owned financial institutions that operate as not-for-profits. Because of this structure, they can offer lower fees and more competitive interest rates compared to Big Banks.

Key factors to consider when choosing an account

Bank accounts should be convenient and easily accessible, all while being cost-efficient. 

Check for:

• Fees & minimums: Choose a no-fee account; just be sure to check what you need to meet the minimum balance requirements. You don't want to pay low-balance fees.
• ATM access: Check whether your account comes with ATM access, limits for monthly withdrawal, multiple ATM partners, or fee reimbursements for withdrawals.
• Interest rates: Compare rates across different accounts. Rates can change, and higher rates typically come with certain restrictions.
• Digital features: Ensure your account offers a user-friendly mobile banking app with features like bill payments, fund transfers, and balance tracking. Check reviews as well before choosing an account.
• Account protections & extras: Some accounts include overdraft protection. This allows payments to go through even if you don’t have enough funds. Linking accounts can also help you manage finances more effectively.

How to switch or open a new bank account

As long as you're over 13 years old (14 years old if you’re in Quebec), you can switch or open a new bank account in Canada:

1. Prepare the necessary documents, such as your valid ID, proof of address, and SIN.
2. Apply either in person, digitally, or by phone call.
3. Wait for approval. Most digital banks will approve and activate your account the same day. If manual review is required, it can take 1–2 business days.
4. Deposit money into your new bank account through direct deposit, Interac e-Transfer®, or linking an external account for digital accounts, or ATM deposit and in-person cash deposit for traditional bank accounts.

Note: For minors, approval from a parent or guardian may be required during setup, depending on local regulations. Valid IDs that are applicable include a passport, provincial or territorial photo ID card, or birth certificate (typically paired with a school ID or another document if a photo ID is not available).

Simplify everyday money management with Neo Financial

Neo Financial offers a modern, tech-forward solution to everyday money management. It comes with a mobile-friendly app, designed for convenience.

• Neo Everyday Account: Enjoy free everyday transactions and automated savings.
• Neo Cash Account: Formerly the Neo High-Interest Savings account, Neo Cash helps you save for the future.

Open an account today.

Key takeaways

• Chequing accounts are best for day-to-day expenses, but they don’t earn interest.
• Savings accounts help you grow your money over time with some interest.
• You can have multiple bank accounts to match your financial needs.

Frequently asked questions (FAQs)

Which bank account should I open first?

Start with a chequing account for daily transactions. Then open a savings account for short-term goals, building an emergency fund or saving for a vacation. The chequing account provides easy access to funds, and the savings account earns interest on the money held in the account.

Can I have both a chequing and a savings account?

Yes, most banks offer both accounts and often provide easier transfers and bundled features. This may also mean fewer fees and shared dashboards for more efficient financial management.

Can I open multiple types of accounts at once?

Yes, you can open multiple accounts at once. You can have one account for bills and another account for savings. Opening multiple bank accounts differs from applying for multiple credit products, such as credit cards or loans, which can impact your credit profile. Please ensure you meet the bank's requirements for each account type.

If you’re interested in growing your credit profile over time, check out how to build credit in Canada.

Is my money safer in a savings or chequing account?

Both are equally safe, as the Canada Deposit Insurance Corporation (CDIC) in Canada usually insures them. However, savings accounts may reduce the temptation to spend because they’re not typically used for daily transactions. Keeping your money slightly “out of reach” can help you avoid impulse purchases and stay focused on your savings goals.

How do interest rates work for savings accounts?

Interest is based on the annual percentage yield (APY), which factors in both the rate and how often it compounds. Think of it like a snowball. Each time interest is added, your savings grow a bit more. Economic conditions may also cause rates to fluctuate.

Do Canadian banks offer the same types of accounts?

Not exactly. While most banks offer similar account types, like chequing, savings, and student accounts, the features, fees, and perks can vary a lot.

To find the right fit, think about how you’ll use the account. Will you need to make daily purchases, save for a goal, or get paid by direct deposit? Look for an account that matches your habits and avoids fees for the things you do most.

What happens if I don’t meet the minimum balance requirement?

You may face fees or a downgrade in features. To avoid this, you can set up auto-transfers or opt for low-balance accounts that offer more flexibility.

How do I avoid paying fees for my bank account?

Some traditional banks waive monthly fees if you set up direct deposit for your paycheque, keep a minimum balance, or only use ATMs in the bank’s network. It’s their way of rewarding customers who use the account as their primary one.

This article provides information and is not intended to provide any personalized tax, investment, financial, or legal advice. You are encouraged to seek professional advice before making financial decisions.

The Neo Cash account is offered by Neo and funds are ultimately held in trust at a CDIC member institution. Earnings for the Neo Cash account are derived from the interest Neo earns on the funds. Neo shares interest at the advertised rate of return for the Neo Cash account, and earnings are calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.

The JA Money card is a prepaid Mastercard® issued by Neo Financial pursuant to license by Mastercard International Incorporated. The JA Money card is powered by the Neo Everyday account, which is provided by Peoples Bank of Canada.

The Neo Everyday account is provided by Peoples Bank of Canada.