Our pick for interest-earning checking: Chime Spending account
- No minimum balance
- No monthly service fees
- Get your paycheck early with direct deposit
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Money market accounts and interest-earning checking accounts let you earn interest on your money while giving you access to ATMs, debit cards and online banking. But you might have to meet strict eligibility requirements or settle for a lower interest rate to qualify.
Generally, no — though you may occasionally see exceptions. Paying bills from your savings account would be detrimental to your savings goals, so most banks don’t allow you to write checks, use a debit card or pay bills from your savings account.
If you want to withdraw any money from your account, you usually have to transfer the funds to a linked checking account. Once the money arrives in the linked account, it can then be used to pay your rent and other bills.
But some companies, like TurboTax, will let you pay from a savings account using what’s known as a direct debit.
When you set up a direct debit from your bank account, you give a third-party service provider permission to withdraw money from your account. But it’s not a good idea to use these often, as they increase your chance of going over your account’s withdrawal limit.
Savings accounts aren’t meant to function like checking accounts. Typically, Regulation D sets limits on how certain types of bank accounts can be used. If you make more than six withdrawals from your savings account per month, your bank can charge you penalty fees, convert your account to a checking account or even decide to close your account altogether.
Cash and ATM withdrawals aren’t included in the six-per-month federal rule, but some banks will choose to penalize those types of excessive withdrawals, too.
That said, Regulation D is currently suspended, and many banks are temporarily waiving the six-monthly transaction limit.
It depends on how you want to use your account. If you want to take advantage of the maximum interest rate offered by a high-interest savings account, you’ll need to be willing to accept limitations on how you can access your money. You’ll be able to make a limited number of withdrawals, and it might not be possible to pay bills directly from your savings account.
If you want to earn interest while regularly moving money into and out of your account, you may be better off with a money market or interest-earning checking account.
While money market accounts are still governed by Regulation D, meaning you’re limited to six penalty-free withdrawals per month, they offer easier access to your money.
Certain accounts will come with a checkbook, debit card and/or ATM access. Others will allow you to use your funds for investments. But you may need to meet a higher minimum balance requirement to be eligible for a money market account.
Conventional checking accounts don’t allow you to earn any interest on your balance. Instead, their main focus is on making it as easy as possible to manage your day-to-day spending through ATM withdrawals, direct debits and online transfers.
However, some banks also offer interest-earning transaction accounts. These accounts offer many of the same features as an ordinary checking account, including the ability to pay bills directly from your account, but they also allow you to earn interest on your balance. They also typically charge minimal or no ongoing fees.
But these accounts don’t come with interest rates as high as those on regular savings accounts, and they may also place limitations on how many transactions you can make each month.
When looking for a new account, compare:
If you’re setting up direct debit with a company:
Most traditional savings accounts won’t let you pay bills online or by check, but some money market accounts and interest-earning checking accounts will. However, you may have to settle for a lower interest rate or meet stricter eligibility criteria.
Compare your savings account options before deciding which account is right for you.
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