Checking vs. savings account: What’s the difference?

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In addition to having a checking account, you will also want to have a savings account. Each serves a different purpose, but they both help you manage your money.

Checking vs. savings accounts

  • A checking account helps you manage your day-to-day finances, like paying your bills, buying groceries and gas and withdrawing cash from an ATM.
  • A savings account is a longer-term account for your emergency savings or money you want to use for saving for a specific goal.

Here are the main differences between the two and why you should have both.

Checking account Savings account
Primary use Spending Saving
Interest Sometimes, but usually minimal Yes, interest rates vary by bank
Common fees Monthly maintenance fee, overdraft fee, out-of-network ATM fee Monthly maintenance fee, minimum balance charge, savings withdrawal limit fee
Minimum balance Varies by bank Varies by bank
Common fees None Six per month in most cases

Checking accounts

Checking accounts are mostly used to make everyday transactions and are used frequently. To make transactions convenient, checking accounts usually come with a debit card, a checkbook and a mobile app with payment features that allow you to send money to yourself or to other people, even if they bank elsewhere.

The downside, however, is that banks typically don’t pay interest on money in checking accounts. So there’s not a lot of opportunity to grow your money.

When shopping around for a checking account, there are two key features to look for:

  • No monthly maintenance fees (or easy ways to waive them).
  • Free access to a large ATM network.

It’s also worth seeing if there’s a sign-up bonus available. You may be able to earn anywhere from $100 to $500 when you open a new checking account and set up direct deposits.

Savings accounts

Savings accounts especially high-yield savings accounts — typically offer higher interest rates than checking accounts allowing you to grow your money faster.

However, with savings accounts, your funds are not as easily accessible as they would be in a checking account. You are generally limited to just six withdrawals or transfers per month from a savings account. If you transact more than that amount, you will likely pay a fee.

Savings accounts are not meant to be used for everyday transactions. Instead, they should be viewed as an account to store your money for a specific goal. With that in mind, banks place more restrictions on savings accounts and the money is not as easily accessible as a checking account.

When looking for a savings account, consider these key factors:

  • A high APY. The higher the APY, the more money you will earn.
  • The minimum balance. Some savings accounts require a high balance in order to earn the APY. Make sure you maintain the minimum balance requirement.
  • No monthly maintenance fees, or easy ways to waive them.

Similar to checking accounts, you may also earn a bonus for simply opening a new savings account.

Why you need both types of accounts

Checking and savings accounts serve a very different purpose, but both accounts are important to have.

A checking account should be thought of as a transaction account — the place where your monthly bills will be paid from, where you’ll write checks or have money electronically drawn from to pay bills. You should maintain a cushion of funds in a checking account. But after keeping the essential amount needed to pay bills (and to make other transactions) in your checking account, the rest of your money should be put in a savings account, brokerage account or invested in a retirement fund.

A savings account can help you save for a specific purpose and earn some interest in the process. It’s a great place to keep your emergency fund or money for a short-term or medium-term goal such as a down payment on a home or car.

How to choose the best checking and savings accounts

When deciding what the best checking and savings account is for you, it’s important that you know what your finances look like, what benefits you’re seeking and what your goals are.

Here are a few questions you may want to answered when looking for a new checking account:

  • Is a branch nearby?
  • Are online services offered?
  • Are there monthly maintenance fees (or an easy way to avoid them)?
  • Are there out-of-network ATM fees?
  • What other services does the bank or credit union offer?

You will want to ask similar questions when looking for a new savings account:

  • Does it make sense to open a savings account at the same bank as your checking?
  • What’s the APY?
  • Are there monthly maintenance fees (or an easy way to avoid them)?
  • Are online services offered?

Everyone’s list may look a little different, but these are some of the common questions you should ask when deciding.

Compare checking accounts and savings accounts on Bankrate to find the right account for you. You can also use Bankrate’s bank reviews to compare banks.

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Written by
Liz Hund
Creative producer
Liz Hund is a social producer at Bankrate and occasionally writes special features on-site with a social-first angle. Her writing has been featured on MSN, Business Insider and in various local publications.
Edited by
Banking editor
Reviewed by
Professor of finance, Creighton University