Many investors use savings accounts to earn interest on money that they don’t need right away. However, sometimes they want to use their money to make a payment. Unfortunately, you cannot write checks from a savings account. Here’s what you can do instead.A financial advisor can help you figure out the best way for you to manage your money.
What Is a Savings Account?
A savings account is an interest-bearing deposit account offered by banks, credit unions and other financial institutions. Savings accounts are federally insured for up to $250,000 per account owner and provide a modest interest rate. Federal regulations limit the number of transactions you can have with your savings account and prohibit these accounts from writing checks.
Most investors have a checking and a savings account at their preferred bank. This tandem allows them to write checks from their checking account and earn interest on their savings account. Investors can freely transfer money between the two accounts based on their needs. The savings account can also be linked for overdraft protection if your checking account balance falls below zero.
No, federal regulations prohibit customers from writing checks against their savings accounts. Additionally, while savings accounts can be accessed through an ATM or debit card, you cannot use the debit card to make purchases using the money in your savings account.If you want to earn interest on your balances and be able to write checks, there are other account options available. These accounts provide additional flexibility and more earning power than a traditional savings account.
Interest-Bearing Checking Account
Many checking accounts now earn interest. While these interest rates tend to be modest, they are comparable to the interest rates on traditional savings accounts. Some online banks offer checking accounts with interest rates that are competitive with rates on high-yield savings accounts. And many of these online accounts have no minimum balance requirements or monthly fees.
High-Yield Money Market Account
A high-yield money market account offers the best of both checking and savings accounts. They give account holders the best interest rates on a savings account while offering the functionality of a checking account. Not all high-yield money market accounts offer check-writing functionality. Before opening your account, verify that this feature is included and what restrictions and fees there may be.
Many high-yield money market accounts have no minimum balance requirements or monthly fees. But, some require larger balances in order to receive the highest interest rates. Think about how much money you’ll keep in the account to determine if you can meet those balance requirements to earn more interest.
Money Market Mutual Fund
Money market mutual funds are offered by brokerage and investment companies. These accounts operate like a money market account offered by a bank or credit union. However, they don’t have the same FDIC protections on the first $250,000 in your account. Instead, investment companies are covered by SIPC protection. SIPC coverage protects up to $500,000 of cash and investments at each financial institution, of which cash is limited to $250,000 in protection.
Not all money market mutual funds have check-writing capabilities, so check with your investment company to verify if they offer this feature. If their money market mutual fund allows check writing, most have no limit to the number of checks that you can write. However, make sure that there are no fees associated with writing checks.
The Bottom Line
While a savings account is a good way to earn interest on your money and save for short-term goals, these accounts do not have check-writing privileges. Instead, investors have multiple options that earn interest and offer the ability to write checks. Before opening an account, compare interest rates, balance requirements, fees and limitations to determine which account is best for your situation.
Financial advisors keep up to date with the latest offerings from banks, credit unions, investment companies and other financial institutions. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Earning more interest can accelerate your goals and provide additional income each year. Because interest rates are low right now, it pays to shop around to find the best interest rates, fees and benefits for your money. Use our savings calculator to determine how much additional interest you can earn by switching to an account with a higher rate.
Writing checks from a savings account is not possible; it can only be done from a checking account. Savings accounts are primarily for earning interest and occasional money transfers, not for check-writing.
Many investors use savings accounts to earn interest on money that they don't need right away. However, sometimes they want to use their money to make a payment. Unfortunately, you cannot write checks from a savings account.
You typically can't write checks from your savings account, as most banks simply don't allow for it. They also don't issue debit cards with savings accounts for making payments or purchases. Your best bet for writing checks is to use your checking account to make payments quickly and safely.
Some banks and credit unions allow customers to set up direct debit to pay bills, such as a utility company or credit card issuer, from a savings account. You'll need to supply account information, including account and routing numbers, and once authorized, the billing company can withdraw funds directly from savings.
A regular checking account simply lets you do all the things you'd expect from a checking account: deposit and withdraw money from an ATM, write checks, pay bills, and make purchases using a debit card.
There are federally-regulated standards to limit consumers to making only six withdrawals or transactions from their savings account every month. In addition, savings accounts don't usually come with checks or debit cards, though they still have a routing number that you can use to send or receive money electronically.
With a savings account, you'd normally need to transfer your money to a checking account first. With a money market account, you could write a check directly from that account when buying a car. If you want to lock in your interest rate, you can do that with a certificate of deposit (CD).
A money market account is a type of savings account that may also offer the ability to write a few checks or make a few debit card transactions each month. Weigh your options: Some high-yield savings accounts beat money market rates and have lower fees, which means you'll come out ahead with the former.
To pay bills from a savings account, you must provide your account information—including routing and savings account numbers—to the payee.They will then remove the money from your account. While this should process without a problem, it does give an external party access to your account.
Savings account holders who need to use their savings to make a payment generally cannot write checks from a savings account. However, they can transfer funds from a savings account into a checking account or purchase a cashier's check to make a payment.
Banks offer interest on savings accounts because they use those funds to give loans. While savings accounts are optimized for long term deposits, it is possible to make purchases with them. However, you may have to pay a fee or lose out on the interest rate for doing so.
Writing checks from a savings account is not possible; it can only be done from a checking account. Savings accounts are primarily for earning interest and occasional money transfers, not for check-writing.
Checking accounts are a household money management staple, allowing you to pay bills and make purchases through electronic transfers, paper checks and debit cards. Consumers usually keep their checking accounts for a long time.
It's best to get the certified check from your own bank where you hold the checking account. It may be possible to get a certified check from a financial institution holding your savings account or investment account.
Can I make an e-Check payment from my savings account? Yes. you can use a regular checking/saving account. No credit card checks, home equity line checks, etc.
A money market account is neither a checking nor a savings account but has certain characteristics similar to both. Like regular checking accounts, money market accounts allow account holders to make withdrawals and transfers, and write checks.
When it comes to comparing a checking vs. savings account, the main difference is that a checking account may allow you to write checks or make purchases and ATM withdrawals using a debit card. Savings accounts don't usually come with checks or debit cards.
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