Banking » Guides » Checking Vs Saving Accounts: Which Is Better For You?
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Checking Vs Saving Accounts: Which Is Better For You?

Saving accounts and checking accounts sound similar and in most features - they do. However - there are a couple of differences between them to consider. 
Checking Vs Saving Accounts: Which Is Better For You?

Your Checking Account

When it comes to understanding your bank accounts, the checking account is the simplest one. This is where you carry out normal transactions with your checks, debit cards, online account or just walking into a branch. You get to pay bills, make deposits, make payments and transfer money super easy with these accounts.

Generally, these are the first accounts that you would create and they give you a whole bunch of benefits. Namely, they’re going to help you get things like savings accounts and investment accounts. Also, closing a checking account can be a short and simple process if you do it correctly.

How Does It Work

Just about anything you want to do with a checking account is going to be easy. Whether you’re transferring funds, depositing funds, taking out money or just spending it, you won’t have problems with these types of accounts.

  • ATM – An automatic teller machine is a super-easy way to get to the money in your checking account. As long as you use in-network machines you can get it without fees too, which means it’s also free access from wherever you are.
  • Debit Card – This is another free method to access your money and to use it without ever having to touch the cash itself. When you make a payment with a debit card you swipe it like a credit card, but the money comes out instantly like if you’d paid cash or with a check.
  • Check – Speaking of checks, they’re not as common for most people, but they’re actually quite simple. You have to write out a check with how much it’s for and who it’s going to and these have to be ordered directly from your bank.
  • Bill Pay – Paying your bills online is free through most financial institutions and you can usually set it up so it’s fully automatic too. That means it’s also going to be a lot more convenient for you.
  • Online Banking – If you don’t want to walk into a bank branch you can set up online systems that will take care of everything. You can just log on a computer and you’ll have no problem doing anything you want from making payments to depositing checks and even transferring money between accounts.

Your Savings Account

When it comes to a savings account it’s designed to keep your money stored for later. That means you’re going to usually make some interest but you’re probably going to have some limits on what you can pull out and when.

Still, these accounts come with FDIC insurance and those interest rates. Even if the interest is less than 2% (which is the average) you can still get something back and you might find something better.

How Does It Work

When you open a savings account that means you could actually get penalized for taking the money out. That’s because banks have the right to limit withdrawals on what’s considered a ‘time deposit’ like your savings account. You generally won’t have to worry about this, but you want to look at the rules. You might be able to make a few transactions, but it’s probably limited to so many a month. You also want to look at different types of fees that are charged, including low balance charges.

There are limits that are imposed by the federal government related to just how many withdraw you can make over the telephone or electronic withdrawal. Usually, this isn’t going to apply to ATM transactions or to in-person requests.

What Are the Differences Between a Checking and Savings Account?


Checking Account Savings Account
Purpose Frequent spending, direct deposits Growing savings, earning interest
Minimum Balance 25-100$ None
Interest Usually don't earn interest About 2% (as of March 2019)
Withdrawal Restrictions Daily limit Typically 3-6 withdrawals a month
Fees Monthly maintenance fee + ATM withdrawal Little to none
Protection Up to $250,000 per account holder by FDIC Up to $250,000 per account holder by FDIC

Increase Your Interest – Savings Account

If you get a checking account you’re generally not going to have any interest building up. That means your money is just going to sit there and do absolutely nothing for you. That’s definitely not the way you want to keep your money, right?

With a savings account, you’re not necessarily getting a lot of interest, but at least you’re going to be building up something. Plus, you can look around for the best rates possible and get something a little better at least.

Lower Monthly Fees – Savings Account

Checking accounts are more and more frequently charging fees for monthly use.

That means you’re going to be paying a few dollars or more just to have that account. In some cases, however, there are ways to get this fee waived if you meet certain requirements. You want to watch for what those are and how you can meet them if you do use a checking account.

When it comes to savings accounts you generally don’t get the fees. That’s because banks are getting more interest than they’re passing on to you. So they take that money out of the fees that they would normally charge you. It means you’re going to save money this way.

Higher Withdrawal Limits – Checking Account

The Federal Reserve Board’s Regulation D requires that banks allow only 6 withdrawals from any account that’s considered money market or savings. If you use an ATM or an in-person request you get to make more, but you’ll want to keep track of how you do your withdrawals otherwise.

With a checking account, you’re not going to have a limit to how many times you want to withdraw money. On the other hand, you are going to have limits on how much money you withdraw.

When you use your card you can only charge up to $1,000 a day over all your transactions (though this may vary a bit with your card) or withdraw up to $500 from an ATM every 24 hours.

Minimum Balance Requirements – Savings Account

When it comes to how much money you need to store you’re going to have better benefits with a savings account. That’s because they usually have very low (if any) minimum balance requirements. They want you to keep your money there, after all, because it’s going to earn the bank interest.

When it comes to checking accounts you usually have an amount that you’re required to keep in the account at all times. This minimum could be only $25 or it could be up to $100 or more, depending on the type of checking account.

Safety and Protection – Both

You’ll get FDIC insurance up to $250,000 with either type of account, which means that you’re going to have much better protection than if you just store your money at home.

This protection occurs because the federal government says that financial institutions need to give you some insurance in exchange for giving them your money and your personal information. What’s even better is you don’t have to pay for this insurance at all.