Checking vs. Savings Account: What’s the Difference?

Checking vs. Savings Account: What’s the Difference?

The primary difference between checking and savings accounts is how they’re used. Checking accounts are best for everyday expenses and bills, as they offer easy access to your money without withdrawal limits and often a debit card and checks. Savings accounts, meanwhile, are best for stashing money for goals or emergencies. You won’t want to touch your savings too often — that money can grow over time, thanks to the interest savings accounts typically earn, and you may also run into monthly withdrawal limits.

Here’s what you need to know about these accounts to decide which one is right for you — though you don’t have to choose.

Differences between checking vs. savings accounts

Checking Accounts vs. Savings Accounts
Checking accountSavings account
General useSpending moneySaving money
Deposits earn interestSometimesYes
Monthly withdrawal limitsNoYes (typically up to 6 per month)
Debit card accessYesRarely
ChecksYesRarely
Monthly maintenance feesSometimesSometimes
Minimum deposit to open accountSometimesSometimes
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What is a checking account?

A checking account is a bank account used for everyday expenses. Checking accounts typically have no monthly withdrawal limits, so you can withdraw money as frequently as your spending needs require. Because of this, however, you usually earn less interest on your deposits than with savings accounts.

When you sign up for a checking account, the bank usually issues you a debit card to access your funds. With this debit card, you can withdraw money from the ATM or make everyday purchases. In addition, the bank may also provide you with checks that you can use to pay your bills or purchase goods, adding further accessibility to your funds in a checking account.

Although some checking account fees are similar to savings account fees, an out-of-network ATM fee is unique to checking accounts. Both accounts may also have monthly maintenance fees, which you can avoid by maintaining a minimum monthly balance. However, with a checking account, this fee can also often be avoided by direct depositing a certain amount each month.

You may have to make a minimum deposit when you open a checking account.

Pros and Cons of Checking Accounts
ProsCons
  • No withdrawal limits
  • Easy to use for everyday spending
  • Typically lower interest rates than savings accounts
  • Not ideal for long-term savings
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What is a savings account?

A savings account is a bank account used for safely storing your money. Interest rates for savings accounts are typically higher than for checking accounts — this makes them a better place to stash money that you aren’t immediately planning to spend, allowing it to grow.

Because a savings account is intended for saving, there are withdrawal limits. Banking institutions generally allow you to make six withdrawals from savings accounts per month — after that, you’ll likely incur an excessive withdrawal fee. In addition to excessive withdrawal fees, some banks will convert your savings to a checking account if you make too many withdrawals. (Note that due to the coronavirus pandemic, the Federal Reserve eliminated the six-transfer limit on savings accounts, though it’s still up to your banking institution whether it will continue enforcing the rule.)

Saving account fees are similar to those for checking accounts, in that some banks charge a monthly maintenance fee. To waive this fee, you may have to maintain a daily minimum balance. Like with checking accounts, some banks will also require that you make a minimum deposit when opening the account.

Pros and Cons of Savings Accounts
ProsCons
  • Typically has a higher interest rate than a checking account
  • Allows you to build long-term savings
  • Monthly withdrawal limits often apply
  • Not ideal for everyday spending
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How to choose the right bank account for you

1. Pick between a checking vs. savings account (or don’t)

The first step in choosing the right bank account for you is asking yourself how you plan to use it. Are you going to use it for everyday purchases, or to save for a down payment on a home? If your answer is the former, a checking account will serve you best; if it’s the latter, choose a savings account. Keep in mind that you can always open a checking account and then transfer deposits to your savings.

Here are some points to keep in mind as you’re thinking about whether a checking versus savings account would serve your needs better:

  • How much flexibility do you need? If you want flexibility, choose a checking account. There are no limits on the number of monthly withdrawals, and you’ll also often get a debit card and/or checks with the account to easily access your funds.
  • Is earning interest a priority? If you’re looking to gain the most interest, choose a savings account. Typically, savings accounts offer higher interest rates than checking accounts.
  • What are your financial goals associated with the account? If you’re trying to save for a future expense, open a savings account. A checking account is great for everyday expenses; a savings account is designed for saving for medium- and long-term financial goals.

While it’s important to know how each account operates, keep in mind that it’s common for people to have both a checking and savings account. Having both types of accounts empowers you to manage your everyday expenses while still saving up for your financial goals.

2. Choose a bank or credit union for your checking or savings account

After selecting the right account based on your needs, you should next focus on deciding the type of financial institution you’d want to use. Do you value face-to-face interaction and the ability to visit brick-and-mortar branches? You might prefer a traditional bank or credit union. However, if earning a higher interest rate on your account is what you’re after, an online-only bank account may be the way to go. Since online-only banks have fewer overhead costs, they usually offer better rates.

Once you finish comparing rates, do some research on other aspects of the institution, such as how much accessibility it offers. For example, check out how widespread its ATM network is, and what fees you would incur for making a withdrawal.

You’ll also want to consider whether there are any minimum deposit requirements that you must meet in order to waive the monthly maintenance fee associated with the account (if there is one), and whether you can consistently meet it. In addition, take into account what other fees the bank or credit union may charge, as those fees would eat into your funds and any interest you may earn.

Overall, it’s important to select an account that works seamlessly with your finances as they are, so your account is a help and not a hindrance.

3. Open your account

The last step is opening the checking or savings account that you’ve chosen, which you can do either in person or online.

To open a bank account in person, you simply walk into a branch location and ask a personal banker to open a checking or savings account. You likely will need to provide certain documentation, such as a few forms of identification, proof of address and a minimum deposit (if required). Since different banks have different requirements, consider reaching out to the bank before your application visit to confirm what you’d need to bring.

If you choose to open an online account, you’ll simply fill out an application, providing the bank with information like your name, address, Social Security number and annual income. The process usually takes only a few minutes (Citibank’s online application, as an example, takes about 10), and you can transfer the minimum deposit required after submitting your application.

Jerry Brown is a personal finance writer based in Baton Rouge, La. He's been writing about personal finance for three years. Financial products he enjoys covering include credit cards, personal loans, and mortgages. Jerry was nominated for a Plutus award for best social media for personal finance in 2020.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.