High interest chequing accounts in Canada

Although it’s true that most chequing accounts in Canada don’t pay interest on your balance, there are a select few that do. Another nice feature is that these accounts typically don’t charge a monthly fee. So, why not take advantage of these perks? We’ve rounded up a list of high interest chequing accounts to help you easily compare your options.

High interest chequing accounts in Canada

Do chequing accounts earn interest in Canada?

No, standard chequing accounts in Canada offered by Big Banks do not earn interest, however chequing accounts offered by digital-only banks in Canada do earn interest. High interest chequing accounts offer the convenience of day-to-day banking while letting you earn a small return on your balance.

For example, Simplii Financial’s No Fee Chequing Account offers an annual percentage yield (APY) of 0.01% on balances of up to $50,000. Tangerine’s No-Fee Daily Chequing Account also provides up to 0.1% interest.

On the higher end, EQ Bank offers a chequing account with a competitive 4% interest rate.

What is the average chequing account interest rate?

The average interest rate for most chequing accounts in Canada is 0%, as the majority don’t offer any interest at all. Of the accounts that do, you’ll find the average interest rate for high interest chequing accounts can fall around 3%. On the other hand, lower-interest chequing accounts usually offer rates in the range of 0.1% to 0.3%, which provides a small but consistent boost to your balance.

High interest chequing accounts are uncommon compared to high interest savings accounts that offer higher ongoing interest rates and much higher promotional rates. That said, while chequing accounts can offer interest, they may not be the best choice for those focused on maximizing their savings.

How do chequing account interest rates work?

Interest rates on chequing accounts determine how much you will earn on any balance in an interest-earning chequing account. For interest-earning chequing accounts, interest is usually calculated daily based on your closing balance and paid out monthly. This means that as long as you maintain funds in your account that aren’t being actively used, you’ll earn a return on that balance.

For example, suppose you have $5,000 in an account with a 0.10% annual percentage yield (APY). Over the course of a year, you would earn approximately $5 in interest divided into monthly payments of about $0.42. Remember, this is a rate and not a fixed amount you earn every month based on your daily balance.

If you leave your interest earnings in the account, it can start to compound, meaning you’ll earn a little more each month as you start accumulating interest on both your original $5,000 and the interest that’s added to it. With more competitive rates like EQ Bank’s Personal Account’s 4% interest, the same $5,000 could generate over a hundred dollars more annually and so on.

High interest chequing accounts offer the convenience of everyday banking combined with a small financial benefit, although the interest rates are generally lower than those offered by high interest savings accounts on the market.

Which Canadian banks offer interest-earning chequing accounts

Most of Canada’s Big Banks, such as RBC, TD, Scotiabank, BMO and CIBC, don’t offer interest-earning chequing accounts. These institutions typically reserve competitive interest rates for savings accounts, focusing their chequing accounts on everyday banking needs without the benefit of earning interest.

However, many digital banks and fintech companies do provide interest-earning chequing accounts. Here are a few examples:

• EQ Bank Personal Account. 4% interest
• Wealthsimple Cash. 3.75% interest
• Neo Money Account. 0.1% interest
• Tangerine No-Fee Daily Chequing Account. Up to 0.1% interest
• Simplii Financial No Fee Chequing Account. 0.01% to 0.01% interest depending on the balance

These digital banks provide an alternative to traditional banks, allowing Canadians to earn interest on their unused money while enjoying the convenience of chequing account features.

What is the highest interest chequing account in Canada?

Currently, some of the highest interest chequing accounts in Canada include the EQ Bank Personal Account (4% interest) and Wealthsimple Cash Account (3.75% interest).

The PC Money Account also offers a 3.5% APY, but keep in mind it is technically a savings account that also functions like a chequing account because it lets you transfer funds to your spending balance.

Keep in mind, interest rates and account offerings can vary over time, so it’s always a good idea to check with financial institutions directly for the most up-to-date information.

High interest chequing account vs. high interest savings account

High interest chequing accounts and high interest savings accounts both offer the ability to earn interest on your money, but each serves a different purpose. A high interest chequing account is designed for day-to-day banking needs, such as paying bills, making debit purchases and transferring funds.

These accounts typically allow unlimited transactions or a high number of monthly transactions, providing flexibility for frequent use. While an interest-bearing chequing account pays on unused balances, the rates are often lower than savings accounts. For instance, high interest chequing accounts might offer rates of 3% to 3.75% at best.

High interest savings accounts, on the other hand, are geared towards helping you grow your savings over time. These generally offer higher interest rates than chequing accounts, sometimes exceeding 4%, and are ideal for storing money you don’t need immediate access to.

That said, savings accounts often come with restrictions, such as limited free monthly transactions or fees for excessive withdrawals. Accounts like this are therefore less suitable for frequent transactions but are better for long-term goals like having an emergency fund or short-term investment.

Choosing between the two depends on whether you prioritize daily banking convenience or maximizing interest on your savings.

Pros and cons of high interest chequing accounts in Canada

Pros of high interest chequing accounts in Canada

• Earn interest on unused funds
• Convenient access for everyday banking
• Access to ATM networks

Cons of high interest chequing accounts in Canada

• Lower interest rates than savings accounts
• Limited availability from traditional banks
• Potential balance requirements

Bottom line

High interest chequing accounts in Canada provide a unique blend of convenience and earning potential and are a fair choice for individuals who want their unused money to generate interest while still having easy access to it for daily use.

However, if offered, chequing account interest rates are generally lower than those offered by high interest savings accounts and are less ideal for maximizing returns on larger balances. Whether these accounts are right for you depends on your banking habits and financial goals.

FAQs about chequing account interest rates

• Do Scotiabank chequing accounts pay interest?

  No, Scotiabank chequing accounts currently do not offer interest.

• Do BMO chequing accounts pay interest?

  No, BMO chequing accounts generally do not provide interest payments, focusing instead on everyday banking features like unlimited transactions and access to a wide network of branches and ATMs.

• Who has the highest interest rate on chequing accounts?

  Currently, EQ Bank and Wealthsimple offer some of the highest interest rates for chequing accounts in Canada, with rates of up to 4%.

• Are digital banks safe for high interest chequing accounts?

  Yes. According to Canada.ca, most financial institutions, including digital banks, take strict security measures to protect you from unauthorized transactions, such as fraud detection and two-factor authentication. For added security, make sure your bank is insured by the Canada Deposit Insurance Corporation (CDIC), which provides protection for eligible deposits of up to $100,000 per insured category.

Written by

Gabriel Vito

Writer

Gabriel Vito is a freelance personal finance writer for Finder. With over four years of experience, he has crafted helpful guides and articles covering various personal finance topics, including credit cards, investing and banking. Gabriel's work has been featured on Yahoo Finance, NASDAQ, GoBankingRates, and more. He has a Bachelor's Degree in English and is passionate about helping others navigate their financial journey. See full bio