What's the Difference Between Checking and Savings Accounts (2024)

FAQs

What's the Difference Between Checking and Savings Accounts? ›

Checking accounts allow quick access to your funds on an ongoing basis, and some checking accounts are interest bearing. Savings accounts usually earn more interest compared to checking accounts and are typically used for a financial goal or specific purpose (vacation, home remodel, etc).

The main difference between checking and savings accounts is that checking accounts are primarily for accessing your money for daily use while savings accounts are primarily for saving money. Checking accounts are considered “transactional,” meaning that they allow you to access your money when and where you need it.

What is a savings account? If chequing accounts are for day-to-day transactions, savings accounts can help you achieve short and long term saving goals. Instead of being used for day-to-day transactions savings accounts may be more appropriate for saving goals since these accounts earn interest³.

What is the difference between a savings account and a checking account? A checking account is for writing checks and a debit card is usually associated with it. A savings account is just for savings, the intention is that you will not touch the money.

There are basically two types of bank accounts: checking accounts and savings accounts. The main difference between them is: one is an account for spending and the other is an account for saving. Simple, right?

Checking accounts allow quick access to your funds on an ongoing basis, and some checking accounts are interest bearing. Savings accounts usually earn more interest compared to checking accounts and are typically used for a financial goal or specific purpose (vacation, home remodel, etc).

A checking account helps you organize your finances and pay bills on time. Checking accounts help you keep a budget on track and, since you can connect online or via your mobile device 24-7, access to your account information is very convenient.

A savings account is a type of deposit account provided by banks and financial institutions. It allows individuals to deposit and store their money while earning a certain rate of interest on the deposited amount.

A checking account is a bank account where you can make cash withdrawals or deposits. You can also use a checking account for electronic transfers or online or in-person purchases. Generally, checking accounts cover everyday expenses, such as rent, utility, and medical bills.

Savings accounts offer one of the simplest ways to earn interest on the money you have. They offer higher interest rates than a regular checking account, while still making it easy to spend and withdraw money.

What is true about a checking account? ›

Checking accounts are designed for everyday transactions, offering features like check writing and ATM/debit cards. They provide easy access to your money but typically offer low or no interest. Meanwhile, savings accounts are intended for longer-term savings with higher interest rates than checking accounts.

In the traditional sense, checking and savings accounts are both incredibly safe places to keep your money. The National Credit Union Administration (NCUA) automatically guarantees accounts up to $250,000 for each member of a federally insured credit union.

The difference between saving and investing

Saving can also mean putting your money into products such as a bank time account (CD). Investing — using some of your money with the aim of helping to make it grow by buying assets that might increase in value, such as stocks, property or shares in a mutual fund.

Credit unions can be ideal for a low-interest loan, lower mortgage closing costs, or reduced fees, but you'll need to qualify for membership. Larger banks may offer you more choices regarding products, apps, and international or commercial products and services, and anyone can join.

Maintaining higher balances in checking can put you at a disadvantage if you're not earning any interest on your money. If you have more than two months' of expenses in a basic checking account, you might consider shifting some of that over to savings.

They earn interest on the securities they hold. They earn fees for customer services, such as checking accounts, financial counseling, loan servicing and the sales of other financial products (e.g., insurance and mutual funds).

In the traditional sense, checking and savings accounts are both incredibly safe places to keep your money. The National Credit Union Administration (NCUA) automatically guarantees accounts up to $250,000 for each member of a federally insured credit union.

Technically, you might be able to pay bills using your savings account, if you can do a bank transfer with your account number, use a debit card linked to your savings, or use a payment app. However, your bank might limit savings account withdrawals to just six per month.

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.

Keeping one to two months' of expenses in checking can help you to stay ahead of monthly bills. You're also less likely to get stuck with overdraft fees, since you have a buffer in your account. Maintaining higher balances in checking can put you at a disadvantage if you're not earning any interest on your money.