Chequing Accounts in Canada: How They Work, Debit Cards and Pending Transactions

FCAC says you can use a chequing account to manage your day-to-day transactions. FCAC stands for the Financial Consumer Agency of Canada. A checking account, in the US spelling, is the same thing. This page explains how chequing packages and fees work, the debit card that comes with the account and pending transactions; accounts are compared across banks on chequing accounts compared and no-fee chequing accounts, and each bank’s lineup is linked below. Opening or switching an account, and accounts for students, children, newcomers and seniors, are in the last section.

What is a chequing account?

FCAC says a chequing account may include a debit card, and lists paying bills (online, by pre-authorized debit or by cheque), making debit card purchases and withdrawing cash from an ATM among the typical uses. FCAC says chequing accounts usually don't accumulate interest on deposits; what a balance would earn in a savings account instead is worked through on chequing vs savings.

Packages are priced by the number and type of transactions they include, and FCAC describes two kinds of transaction. FCAC lists self-serve transactions, made without a teller, as ATM withdrawals, transfers and bill payments (at an ATM, by telephone or on the Internet), writing cheques, debit card purchases at a point of sale, ATM deposits and pre-authorized debits. FCAC lists teller-assisted transactions, made with the help of a teller and usually in a branch, as withdrawals, transfers between accounts and bill payments.

The pages under ways to move money cover Interac e-Transfer, pre-authorized debits, cheques and direct deposit, and the numbers that identify the account are explained on routing numbers. FCAC notes that plenty of savings-account holders also keep a chequing account for everyday banking, and how the two differ is set out on chequing vs savings.

What kinds of chequing account packages are there?

FCAC says that with a monthly fee account you pay a set amount each month, which usually includes a certain number and type of transaction. FCAC says you must pay for every transaction over the number your monthly banking package allows. The monthly fee can work in several ways, each compared on the page linked beside it:

FCAC says you may be charged the full monthly fee if your balance drops below the required minimum, even for one day, and may also pay a fee for every transaction. Each bank’s packages and fee waivers are on its lineup page, linked below.

What else can a chequing account charge for?

FCAC lists services that can cost extra: electronic transfers, personalized cheques, overdraft protection, safety deposit boxes and money orders. FCAC says to ask about extra fees for certain transactions, such as teller-assisted ones, and FCAC says some financial institutions treat transactions made over the phone with a customer service agent as teller-assisted. Using another financial institution’s ATM can bring extra fees too, one of the charges on FCAC’s list of questions for a bank, and charges by bank are compared on ATM fees.

FCAC says an overdraft occurs when you don't have enough money in your bank account to cover a payment or withdrawal, and FCAC says overdraft protection is a financial product that may cover the transaction if your account is in overdraft; how it is set up and priced is on overdraft protection. FCAC says a financial institution may charge a non-sufficient funds (NSF) fee when there isn't enough money in the account to cover a transaction such as a cheque or pre-authorized debit, and what follows a payment that bounces is on NSF fees and bad cheques. FCAC says a financial institution can change its account service fees, but federally regulated ones must tell you in advance of any increases to existing fees or new fees; the notice rules are on bank fees, and fees by bank are compared on bank fees.

How do you choose a chequing account, and where are accounts compared?

FCAC says to count how many transactions you make in a typical month: cash withdrawals, bill payments, debit card purchases, electronic transfers, pre-authorized debits and pre-authorized transfers to a savings account such as a TFSA. FCAC says to start by looking at no-cost or low-cost accounts to see if they meet your needs; what the institutions that signed FCAC’s commitment offer is explained under low-cost and no-cost accounts. FCAC lists what to ask about before deciding: the monthly fees; the number and types of transactions included; extra fees for some transaction types, such as with a teller; fees above the monthly transaction limit; overdraft fees and interest; fee reductions or waivers for a balance; a discount for other products; a discount for a youth, senior, newcomer or student; and extra fees at another institution's ATM.

FCAC also points to its Account Comparison Tool: The Account Comparison Tool compares bank account interest rates, fees and services.

On this site, accounts are compared here:

• Chequing accounts compared across banks, by need, including CIBC vs TD vs RBC
• No-fee chequing accounts
• Each bank’s chequing lineup, fee waivers and fees: RBC, TD, BMO, CIBC, Scotiabank, Manulife Bank
• Online banks compared and a big bank, an online bank or a credit union
• US-dollar accounts and bank accounts for freelancers and small businesses
• How sign-up offers and referral programs work: bank account promotions

How does a debit card work?

FCAC says a debit card is a card you can use to pay for goods and services, or withdraw money, directly from your bank account. FCAC says financial institutions, such as banks, usually give you a debit card when you sign up for an account.

FCAC says you need a PIN to use your debit card, but usually not for a contactless tap; you are asked for it if you tap above the contactless card payment limit. Interac says transaction limits are set at up to $250 per transaction, and a cumulative contactless limit is set by individual banks or credit unions; the limits each bank publishes are listed on debit purchase and tap limits by bank. FCAC says a financial institution may set a daily dollar limit on what you can withdraw with your debit card, and there may be different limits for cash withdrawals, in-store purchases and online purchases; the figures by bank are on ATM limits by bank, and the reasons a card is refused on why a debit card is declined.

A debit card can be a traditional card or a co-badged one, which carries the Interac logo alongside a second payment brand’s:

FCAC says a co-badged debit card is not a credit card, and the funds are always taken from your chequing or savings account; how a debit card and a credit card differ is on credit card vs debit card, and paying by phone on digital wallets. FCAC says you may have to pay a fee when you use your debit card, depending on your financial institution. Abroad, FCAC says whether your debit card works in ATMs in other countries depends on which ATM networks your financial institution belongs to, and FCAC says foreign currency conversion fees may apply when withdrawing money from an ATM in another country; changing money is covered on currency exchange.

What if a debit card is lost, stolen or used without your permission?

FCAC says to report a lost, stolen or cloned debit card as soon as possible and to check your agreement for reporting deadlines. FCAC says you're not responsible for debit losses due to situations beyond your control, for example technical problems or someone using your card after you reported it lost or stolen. FCAC says the most you're responsible for on a debit card usually can't be more than the card's withdrawal limits, though you may be responsible for more than your account balance if the account links to a line of credit, overdraft protection or other accounts. FCAC says Visa, Mastercard, American Express and Interac have committed to protect you against financial loss if someone uses your credit or debit card without your permission, and that if you took reasonable care of your account information and PIN they'll usually reimburse you in full. FCAC's page on unauthorized credit and debit transactions says its stated rights apply when you are dealing with a federally regulated financial entity like a bank, federal credit union or payment card network operator.

Under the voluntary Canadian Code of Practice for Consumer Debit Card Services, which FCAC publishes and which covers only debit card and PIN transactions at point-of-service terminals (not transactions outside Canada or that transfer funds into or out of Canada), a cardholder is responsible for all authorized use of a valid card, but is not liable for losses from circumstances beyond their control, including unauthorized use after the card was reported lost or stolen, or for unauthorized use they unintentionally contributed to if they co-operate in any investigation. In all other cases where the cardholder contributes to unauthorized use, by voluntarily disclosing the PIN or by not telling the issuer within a reasonable time that the card was lost, stolen or misused or that the PIN may be known to someone else, the cardholder is liable for the resulting loss, which will not exceed the established debit card transaction withdrawal limits, although in some circumstances it may exceed the funds in the account. The voluntary Canadian Code of Practice for Consumer Debit Card Services, which FCAC publishes, says in section 6 that in the event of a problem with a debit card transaction a cardholder should first attempt to resolve the problem with the PIN issuer, and that a problem with merchandise or retail service paid for through a debit card transaction should be resolved with the retailer concerned. The Code’s conditions, and FCAC’s own statements, are on who pays for a debit transaction you didn’t make, and the steps for disputing a charge are on disputing a charge. Blocking a card and replacing it is covered on a lost or stolen debit card, scams on bank fraud and scams, and taking a problem further on complaining to your bank and how long a refund takes.

What is a pending transaction?

For a debit card, Interac says Interac Debit chip and PIN and contactless transactions are approved by your bank or credit union in real time and appear instantly on your bank account records, so you can monitor your available balance.

One bank says pending transactions are purchases, payments, pre-authorizations (also called holds) and other transactions that haven't yet been posted to your account, in a help page about its credit card accounts. One bank says pre-authorized transactions occur when some businesses apply a hold amount for the upcoming transaction or other charges; the amount is not posted but is deducted from your available credit until the merchant cancels it, on those credit card accounts. The same credit card page says the pending amount for some pre-authorized charges, at gas stations for instance, can sit above what was spent and changes to the real amount once posted, and that a charge listed under both pending and posted for a time is billed once.

Money from a deposited cheque that is not yet available is a different matter, covered under cheque holds. The wait for a refund to reach an account is covered on how long a refund takes, and a card turned down for lack of money on why a debit card is declined.

Is money in a chequing account insured?

The Canada Deposit Insurance Corporation (CDIC) insures eligible deposits at its member institutions if one fails, up to $100,000 per coverage category, principal and interest included, so deposits in more than one category can be covered for more in total. Chequing accounts are on CDIC’s list of eligible deposits: CDIC protects these eligible deposits held in one name: savings accounts, chequing accounts, term deposits including GICs. Member institutions, joint and registered categories and credit unions’ provincial coverage are on CDIC deposit insurance, and how protection works at the providers on the no-fee page is under what a no-fee account leaves out.

Opening, switching and accounts for each stage of life

What it takes to open an account, moving to another bank, and accounts for particular readers are on these pages:

• Opening a bank account: ID and your rights and holding more than one account
• Switching banks and closing an account
• Joint accounts and a joint account when one owner dies
• Student accounts and banking for international students
• Accounts for children and for teens
• Accounts for newcomers and for seniors

Related pages

• Chequing vs savings
• Overdraft protection
• How long a refund takes
• Unclaimed bank balances
• Kinds of banks in Canada
• Savings accounts explained
• Bank fees
• Ways to move money
• ATM and debit limits by bank
• Routing numbers
• CDIC deposit insurance
• A lost or stolen debit card
• The banking section
• Prepaid cards