Checking accounts and savings accounts are two of the most common types of bank accounts available. However, they work in different ways and serve separate functions. In this guide to checking vs. savings accounts, we compare and contrast these popular bank accounts to help you decide which account type(s) meet your financial needs.
Key Differences Between Checking and Savings Accounts
The biggest difference between checking and savings accounts is that checking accounts are typically used for day-to-day spending. By contrast, savings accounts are intended for short- to long-term saving.
That's because you can earn interest on your deposits and grow your money over time with a savings account. Most checking accounts accrue little to no interest.
A bank may also limit the number of transactions you can make in a savings account without paying a fee. Typically, you can use a checking account whenever you like (although there may be limits to how much money you can withdraw, spend, or deposit in a day). Fees may apply for certain transaction types.
The following table highlights the key differences.
| Feature | Checking Account | Savings Account |
| Primary Use | Everyday spending and bill payments | Saving for future goals |
| Interest Earned | Typically little to none | Earns interest on deposits |
| Transaction Limits | Generally unlimited (subject to overdraft rules) | May have limits on withdrawals per month |
| ATM Access | Typically yes | May be limited or required transfer to checking |
| Fees | May include overdraft fees, ATM fees of monthly maintenance fees | Possible fees for excessive withdrawals or low balances |
What Is A Checking Account Used For?
Checking accounts are bank accounts that store your money until you want to spend it. You can also use a checking account to pay for goods and services digitally, as well as pay your bills online.
Getting money into your account is relatively easy, too. Many employers will set up direct deposits so your paycheck goes straight into your checking account. You can also usually fund your account through a banking app, at an ATM, or at a local bank branch.
How Can I Access My Money With A Checking Account?
Accessing your money with a checking account is easy and convenient. You can:
- Use a debit card: Most checking accounts have debit cards for purchases. You may be required to enter your personal identification number (PIN) to complete transactions when using your debit card as an added layer of protection.
- Use mobile banking apps: You can use mobile banking to pay recurring bills, deposit checks, and monitor your account's security. You can also use apps connected to your checking account to send money to people you know and trust, such as Venmo and Zelle®.
- Withdraw from an ATM: You can use your debit card at an ATM to withdraw cash, make deposits, and check your account balance. However, keep in mind that if you use an ATM out of your bank's network, you may receive charges from your bank and/or the bank that owns the ATM.
- Write paper checks: Typically, you'll receive an order of paper checks when you open a checking account. You can always purchase additional checks as needed.
- Visit a local branch: Visit a local banking branch and tell the teller you'd like to withdraw cash. You'll need to bring along a photo ID.
Checking Account Fees
Some banks charge monthly maintenance fees for checking accounts, but they'll often waive these costs for maintaining a set minimum balance or direct deposit in your account. Other accounts may not charge fees at all.
Many checking accounts also charge fees for overdrawing on your account (spending more than you have deposited) and fees for using out-of-network ATMs. Always make sure that you read and understand the terms of your account so you don't get caught off-guard by any unexpected fees.
Benefits Of A Checking Account
The biggest benefit of having a checking account is the easy access to your money.
Checking accounts eliminate the need for carrying large amounts of cash around with you — which can be a safety issue. Many banks also offer overdraft protection that may help you avoid fees in the event you spend more than your available balance in your checking account. Some banks may also require you to inform them of your decision to be covered by overdraft protection, so please check with your bank. In addition, checking accounts with banks covered by the Federal Deposit Insurance Corporation (FDIC) are typically covered up to the legal limit, giving you protection from bank failure.[1]
What Is A Savings Account Used For?
Typically, savings accounts are used to save money for short- to long-term savings goals.
Unlike most checking accounts, savings accounts pay interest rates on your deposited funds, putting your money to work. Some accounts — dubbed high-yield savings accounts — pay more than others. Because most banks limit the number of withdrawals you can make from a savings account in a month[2], these accounts are not intended for everyday spending.
For longer-term savings goals, some people opt for certificates of deposit (CDs), which typically offer higher interest rates in exchange for keeping your money deposited for a set period. Money market accounts offer another alternative. They often provide higher interest rates than traditional savings accounts while maintaining some checking account features like limited check-writing abilities.
How Can I Access My Money With A Savings Account?
Accessing your savings account funds is relatively easy. You can:
- Use mobile banking apps: Use your bank's app to transfer funds from your savings account to a checking account (or another type of account).
- Withdraw from an ATM: Your bank may give you an ATM card that you can use at an automated teller machine to withdraw or transfer funds.
- Visit a local branch: A teller at your local bank branch can assist you in withdrawing or transferring funds. You'll need to bring along a photo ID.
Savings Account Fees
Some banks charge fees for keeping a savings account. Your bank may waive them if you maintain a certain minimum balance in your account or if you link a checking account.
In addition, your bank might charge you a penalty if you make too many withdrawals in a month. Always ensure you understand the fees your bank charges before signing up for an account.
Benefits Of A Savings Account
The biggest benefit of opening a savings account is the fact that you can earn interest on your deposits and withdraw your money at any time without penalty (unlike with a certificate of deposit (CD)). Savings accounts also keep your money safe — they're insured up to $250,000 per depositor, per bank, by the FDIC[3].
Checking vs. Savings Accounts: Which Account Fits Your Needs?
Checking accounts and savings accounts serve similar but different purposes. Both types of accounts can keep your money safe until you need it. However, checking accounts are the better option for day-to-day spending, while savings accounts are great for saving your money.
Growing Your Balance with Automatic Savings
One potential advantage of opening both a checking and savings account is the ability to take advantage of automatic savings programs. Enrolling in auto savings allows you to transfer funds between accounts on a set schedule, which may help build savings over time.
For example, scheduling an automatic transfer of $50 a month from checking to savings helps remove the emotional decision-making from saving money. When transfers happen automatically, you may be less likely to skip saving in favor of spending. Many people also find that they adjust their spending habits to match their available checking balance, making it easier to save consistently.
The Bottom Line
Many households opt to have both a checking and a savings account — often at the same bank. By doing this, you can link both types of accounts and easily transfer funds between them. You may want to set up a checking account for your everyday spending and save and earn interest for longer-term goals in a savings account. It's the best of both worlds.
