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Checking Account

Many people wonder whether they should get a checking or a savings account. They want to know which will serve them better, or whether they need one at all. Continue reading to learn the difference between a checking and savings account.

Understanding Checking Accounts

A checking account is a bank account where you can make both deposits and withdrawals. They allow you to use a debit card or to write checks. When you withdraw money, you can cash a check, fill out a withdrawal slip, take money out at an ATM, use your debit card, send an ACH or wire transfer, and more. 

You can receive deposits through any of these methods, as well as through mobile check deposit. A checking account works well for people who use their bank accounts on a daily basis.

When Is a Checking Account a Good Idea?

There are a number of reasons to get a checking account. You can pay bills online or with a check. You can also make purchases or withdraw money from an ATM with your debit card. Another thing you can do is transfer money online to a linked account. Some checking accounts pay interest, while many do not.

Understanding Savings Accounts

A savings account is also a deposit account, and they can hold money that you aren’t using to pay your bills or cover your expenses. You can use them to create an emergency fund or to save for a large purchase. You can transfer money to your checking account, and you can withdraw it, but generally, these accounts are used to save money.

How Are They Different?

Although you can earn interest with both types of accounts, you are more likely to earn interest with a savings account. You usually earn an annual percentage yield for letting the bank use your money while you are saving it.

Another difference can be the number of withdrawals. When you have a checking account, the withdrawals can be unlimited, whereas there are often limits for savings accounts. You might be allowed four to six withdrawals each month, whereas you can write checks any time.