What Are the Differences Between Checking and Savings Accounts?

Checking and savings accounts are the most commonly used bank accounts. They both retain money for safekeeping but have distinct characteristics, so understanding the differences and when to utilize each is critical.

Checking vs. Saving

Checking Accounts

Used for payments Best for the money you propose to spend soon

Savings Accounts

Used to save for the future Good for money you do not need right away

Checking Accounts

A bank account is designed for frequent transactions, and you’ll use your money in a variety of ways. Automatic electronic payments: If you pay regular bills, you’ll automatically have funds deducted from your checking account each month, eliminating the necessity to pay bills manually. For instance, you’ll set up automatic mobile phone bills, mortgage payments, and insurance premiums by providing your checking account details to anybody you would like to pay. Debit card payments: A debit card allows you to easily spend from your checking account balance. You’ll swipe the card for in-person purchases or enter your card information for online payments. Online bill pays together with your bank: In addition to having billers deduct money from checking, you’ll send payments from your checking account on demand. Log in to your account and make a payment, and your bank will mail a check or send the funds electronically. ATM withdrawals: Your open-end credit card can also be used to withdraw cash from ATMs (and even deposits in some cases). Paper checks: Although they aren’t as popular as they should be, checks may still be a cheap and convenient way to pay.

Checking Account Interest

Traditional checking accounts do not pay interest on balances. However, some checking accounts pay interest, and if you maintain a considerable amount of money in checking, people’s accounts may be enticing. To seek out interest-bearing checking, look for: Online banks that pay interest on checking balances: Alliant Credit Union’s High-Rate Checking account pays a modest interest. Local banks and credit unions that provide “rewards” checking accounts: Be warned that you may need to fulfill tight conditions in order to earn a significant sum. For instance, you’ll need to use your debit card 12 times per month or satisfy other requirements. For most people, checking accounts aren’t a big source of interest earnings. If you just keep a little amount of money in checking (or if interest rates are low), you should focus on free checking accounts that don’t deplete your account balance. Before you get too enthusiastic about interest checking, figure out how much you’ll make.

Checking Account Fees

Checking accounts are notorious for charging fees. However, with free checking accounts, you will avoid these costs. There are two options for banking without paying monthly fees: Find a very free checking account: To do so, ask local banks and credit unions, which can not have monthly maintenance charges. Some online banks also provide free checking. Qualify for fee waivers: You’ll avoid fees by meeting certain criteria at most banks. For instance, if you found direct deposit into your account (from your employer), you’ll be able to bank fee-free. Checking accounts charge a spread of fees: Monthly maintenance charges: Monthly flat-dollar fees that begin with your balance. It’s difficult to envisage a circumstance in which paying such fees makes sense. Overdraft charges: Transaction fees for spending money from your account. Even if your account is empty, the bank may “lend” you money or enable payments to pass through. You would like to repay those amounts, typically paying additional overdraft charges. Insufficient funds cost: These are similar to overdraft fees, except they may be applied to your account even if the bank does not cover payments for you. If you are trying to spend more than you have, an insufficient funds fee may apply. Additional fees: You will have to pay ATM fees to use specific ATMs, while certain banks may reimburse those fees. Furthermore, some banks impose fees for services such as wire transfers, debit card replacement, and stop-payment requests.

Savings Accounts

Savings accounts are intended to keep your money secure while earning a little amount of interest on the sum in your account: Grow your money: Savings accounts often pay interest, so you may gain money on money you don’t use when compared to checking accounts, which often do not yield interest. Separate long-term money: Savings accounts might help you save for a certain time period or other financial goals (such as a trip or down payment). You are less inclined to overspend if you remove dollars from your bank account. It can even add up to use multiple savings accounts for various goals.

Access Your Savings

When you need to spend your savings, you’ll access funds in several ways. As of April 2020, federal law does not limit consumers to six monthly withdrawals from savings accounts, while individual banks may set their own limits. Transfer to checking: When you intend to spend money, you can transfer funds from your bank account to a checking account. That is nearly quick if both accounts are in the same bank, yet it usually takes several days to transfer money from one bank to another. Cash withdrawals: If you employ cash and your bank provides an ATM card, you’ll get cash out of your savings account at an ATM. Likewise, you’ll visit a bank branch and request cash. You’ll withdraw funds with an ATM or bank teller as often as you want. Request a check: Banks also can print checks payable to you. You’ll then deposit those checks at a different bank or credit union. There’s no limit to the number of checks you receive when the checks are payable to you.

Savings Account Fees

Savings accounts tend to be less costly than checking accounts, but reviewing fee schedules before you open an account is critical. Monthly fees aren’t very common, but ATM fees are still a reality. If you create more than six withdrawals (ATM withdrawals don’t count toward that limit), you’ll face excess transaction fees.

Beyond Checking and Savings Accounts

Checking and saving accounts aren’t the sole accounts available at banks. Get conversant with other options.


Shave features of both checking and savings accounts. They often pay quite checking accounts, and they allow limited spending. Counting on your bank, a market account might provide a checkbook, an open-end credit, or online bill payment options.


CDS are certificates of deposit for money that you do not intend to spend for at least six months. CDs often provide higher interest rates than savings accounts, but you want to commit to leaving your assets undisturbed for six months, a year, or more. If you cash out too soon, you may have to pay the penalty.

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