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Checking vs. savings accounts
Paying bills or building your nest egg? Access to your money is the biggest difference.
Updated . What changed?
Checking and savings accounts are popular options that can keep your money safe. But one is better for saving, and one is better for spending. Compare rates, fees, access and other features to find out whether a checking vs. savings account is right for you.
What’s the difference between a checking and savings account?
Checking accounts are designed for everyday spending. They come with a debit card and give you a convenient way to pay bills, withdraw cash, transfer funds and deposit money.
Savings accounts provide a safe place to store your money for later use.
Use this table to compare each feature to see which account makes the most sense for your financial situation.
|Interest||Sometimes, average rate is 0.04%||Yes, average rate is 0.06%|
|Check writing||Yes||Rarely — varies by bank|
|ATM access||Yes||Rarely — varies by bank|
|Minimum deposit||Varies widely, typically between $0 and $100+||Varies widely, typically between $0 and $500+|
Checking vs. savings account: Which is better for me?
Checking accounts are transactional and designed for everyday use, while savings accounts are more restrictive. They serve different purposes, but they can also work together. However, if you’re only looking for one, the best option will depend on what you plan to use it for.
Pick a checking account if …
- You need unrestricted access to your money
- You plan on making multiple transactions per month
- You want features like overdraft protection and bill pay
Pick a savings account if …
- You don’t need easy access to your money
- You’re looking to save money and earn interest
- You want to limit your spending
Should I get a checking and savings account?
Having both a checking account and a savings account could help you manage your money and save better. Your checking account provides flexible access to cover expenses, bills and more, and you can transfer any extra money to your savings account to earn interest. Plus, some banks allow you to set up overdraft protection that uses funds from your savings account to cover checking transactions.
Should I open a checking account and savings account at the same bank?
It depends. One of the benefits of keeping your accounts at the same bank is that many institutions will waive monthly fees or provide free overdraft protection for your linked accounts. Plus, it’s easy to transfer funds between accounts almost instantly. But this can work against you if you’re tempted to dip into your savings and spend the money on other things. If you prefer to keep your savings “out of sight, out of mind,” you may be better off keeping both accounts at separate institutions.
Keep in mind that not all banks offer both checking and savings accounts. Often times the ones with the best savings account rates don’t offer any checking products. In this situation, you may have to keep your accounts at two separate institutions anyway.
Are checking accounts and savings accounts safe?
Checking and savings accounts are both safe as long as they’re federally insured through the FDIC or NCUA. This federal insurance refunds up to $250,000 if your bank fails or goes under.
A checking account may be more vulnerable to fraudulent activity because it comes with a debit card. A thief can steal your card information and withdraw funds or rack up unauthorized purchases. That’s why it’s considered best practice to keep one or two months of expenses in a checking account and the rest in savings.
Pros and cons of checking vs. savings accounts
Checking and savings accounts have quite a few things in common. They’re both federally-insured up to $250,000, and they both have common fees for monthly maintenance, ATM usage, paper statements, inactivity and more. But they each have unique pros and cons:
- Unlimited access. With a checking account, you can make as many transactions as you’d like since there’s no federal restriction.
- Low opening deposits. Checking accounts typically have lower minimum deposit requirements than savings accounts. Some even let you get started with $0.
- Features. Many checking accounts offer features like overdraft protection, bill pay, rewards programs and more.
- No interest. Although some checking accounts earn interest, most don’t. This means your balance won’t grow while it sits in your account.
- Easy to overspend. With no limit on how many transactions you can make, there’s nothing stopping you from spending.
- Balance can go negative. Most checking accounts allow you to make purchases even after your balance drops to $0, which could result in costly overdraft fees.
- Limits spending. Savings accounts have certain withdrawal limits due to Regulation D, which can prevent you from spending and encourage you to save.
- Can’t overdraft. Savings accounts don’t come with a debit card or checkwriting privileges, which means it’s nearly impossible to reach a negative balance.
- Earns interest. Savings accounts pay interest on your balance, so you’ll earn money simply for holding money in the account.
- Limited access. While savings accounts can limit your spending, they could also prevent you from accessing your money when you need it.
- Higher deposits. Most savings accounts have higher deposit requirements than checking accounts.
- Lack of features. Unlike checking accounts that offer perks for using the account, savings accounts typically don’t have as many features.
How do I know if I have a checking or savings account?
Here are three ways to figure out what type of account you have.
- Look at the name of the account. If it has the words “checking” or “spend” in the title, it’s a checking account. If it has the words “savings” or “save” in the account, it’s a savings account.
- Read the account agreement. This document should clearly list if it’s a checking or savings account. If not, any mention of overdrafts points to it being a checking account. Excessive withdrawals mean it’s a savings account.
- Call the bank. If you still can’t figure out what type of account you have, contact customer service and ask. They’ll let you know on the spot.
How to compare checking accounts vs. savings accounts
To find out if you need a checking account or a savings account, think about features such as:
- Interest rates. Most checking accounts don’t pay interest, while you could earn up to 2% or more with the right savings account.
- Deposit requirements. Initial deposit requirements will vary whether you choose a savings or checking account, but checking accounts generally have lower requirements.
- Features. Checking accounts often have more features such as overdraft protection, cash back and bill pay.
- Fees. Checking accounts are more likely to have fees, but you should watch out for additional charges no matter which option you choose.
- Access. Checking accounts give you more access to your money, but if you’re looking for an incentive to save, savings accounts have limits to discourage spending.
- Security. Both accounts are eligible for FDIC deposit insurance, but only if the issuing bank is FDIC-insured.
Compare checking vs. savings accounts
Use the tabs on the table to explore checking and savings accounts. Sort each tab by minimum deposits, fees and more. To compare multiple accounts side-by-side, click the “Compare” box next to your top picks for an alternative view.
Open a checking account to get easy access to your money or a savings account to earn interest and limit spending — or open both to cover all of your financial bases. Either way, compare options to find the right one for your financial needs.
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