Checking vs Savings Account: Which One Should You Use?

Checking vs Savings Account

As far as bank accounts go, the two most commonly used types are Checking and Savings accounts. While both of these accounts store your money and keep it safe, they do differ in some key aspects. In this post, we will go through the differences between checking and savings accounts. After you are done reading this, you will have a clearer idea on the subject and you will be able to choose between these accounts better. Let’s get started.

Checking vs Savings Account: All You Need to Know

How can you use savings accounts?

Savings accounts store your savings safely and pay you a decent amount of interest on the balance. Here’s what you can do with savings accounts:

Grow your money

Savings accounts usually pay a decent interest rate and the money that you don’t use grows because of the interest paid. This is the biggest advantage that savings accounts have over checking accounts, which usually don’t pay any interest to users.

Separate long-term money


Access Your Savings

If you intend to spend some of your savings, you have different ways of accessing it. There are some federally placed restrictions on your withdrawals though. It’s always best to enquire with your bank about them. Usually, you can make up to six withdrawals per month, but certain types of transactions are unlimited.

Transfer to checking

When you plan to use a certain amount of money, you can transfer funds from your savings account to your checking account. That’s almost instant if both accounts are at the same bank, and it typically takes a few days to move money from one bank to another.

Cash withdrawals

When you want to withdraw cash from your savings account, you don’t have to visit a bank for doing that. You can do the same with the help of the ATM cum debit card that your bank provides and use it to withdraw cash at an ATM as frequently as you like.

Request for a cheque

While these have become somewhat outdated today, you can still ask your bank to print cheques for you. You can then deposit these cheques at a different bank or credit union. The number of checks don’t have any limit and you can get as many as you request from your bank.

What are the savings account fees?

The charges and fees levied for savings accounts are usually lower than that of checking accounts. However, you should definitely review fee schedules before you open an account. Monthly charges are unusual, but ATM fees are almost always charged. If you make more than a certain number of withdrawals a month, you will have to face excess-transaction fees.

How can you use a checking account?

A checking account is best for users who need to perform frequent transactions. The money in it can be used in many ways. Here are some of the ways you can use your checking account:

Automatic electronic payments

Most of us have to pay bills every month and sometimes keeping track of every single bill and its deadline becomes a little complicated. This is where a checking account comes in very handy. With your checking account, you can have funds deducted automatically each month, eliminating the need to manually pay bills. You can set up automatic payments for mobile phone bills, mortgage payments, and insurance premiums. All you need to do is provide your checking account details to the person on firm you want to pay.

Debit card payments

A debit card allows you to spend from your checking account balance easily. You can use the card to pay at POS (Point of Sale) kiosks or use the card details to pay online.

Online bill payment with your bank

In addition to having billers deduct money from checking, you can send payments from your checking account on demand. Just log in to your account and set the payment up. After that, your bank will electronically transfer funds or mail a cheque for the purpose.

ATM withdrawals

You can also use your checking account linked ATM cum debit card to withdraw money from ATMs. You can even use it for depositing money at some places.

Paper checks

With the rise of internet and digital payment modes, paper cheques have declined in popularity. However, they can still serve as an inexpensive and easy payment option.

What are the interest rates offered by checking accounts?

Traditionally, checking accounts don’t provide any interest on your account balance. However, these days, some checking accounts do provide interest payments on your account balance. This might be useful for you if you keep a large chunk of money in your checking account.To find interest-bearing checking accounts, look for:

Online banks that pay interest on checking balances: Alliant Credit Union’s High Rate Checking Account pays decent interest rates.

Local banks and credit unions with “rewards” checking accounts: Beware that you may need to meet strict criteria to earn a meaningful amount. One such scenario could be using your debit card for a certain number of transactions per month.

If interest earning is your primary goal, checking accounts are something you should avoid. Unless and until you have a large amount of money in your checking account (which most checking account users don’t), the low interest rates will not help you. You will be better off trying to get a free checking account that doesn’t drain your account balance. Calculate how much you’ll actually earn before you get too excited about interest checking.

Checking accounts are notorious for charging fees. However, you can get past this hassle with the help of free checking accounts. Here are the ways you can use them without paying any monthly charges:

What are the different kinds of checking account fees?

Here are the different fees and charges associated with checking accounts:

Monthly maintenance charges: These charges are deducted from your account balance every month. Ideally, you should look for ways to avoid paying these fees.

Overdraft charges: These are levied when you spend more money than your account balance. In such scenarios, the bank might “lend” you money or allow payments to go through even when your account has insufficient balance. You will need to eventually pay the amount back, in addition to the overdraft charges.

Insufficient funds fees: Similar to overdraft charges, but those might hit your account even when the bank doesn’t cover payments for you. In case you try to spend more money than you have, the bank will levy an insufficient funds fee.


Find a free checking account: Check out local banks and credit unions and search for the ones which don’t levy a monthly maintenance charge. Some online banks also provide free checking.

Qualify for fee waivers: This is a common theme with most banks, if you fulfil certain criteria, your fees can be waived off. For example, if you set up direct deposit into your account (from employer), you may be able to bank fee-free.

Checking vs Savings Account: Conclusion

Checking accounts are used for making payments and are great if you intend to spend some money soon. Savings accounts are better for saving money for the future and earning interest. You should use a savings account when you don’t have immediate need of spending money from your savings.

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