Home Money banking Difference Between a Savings and Checking Account

Difference Between a Savings and Checking Account

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A checking account is a type of bank deposit account that is designed for everyday money transactions. The money in a savings account, however, is not intended for daily use, but is instead meant to stay in the account — be saved in the account — so that it might earn interest over time.

Savings accounts have higher interest rates than checking accounts, meaning it is better to let large sums of money (e.g., an emergency fund) sit in savings instead of checking. The fees and other criteria for checking and savings accounts — such as monthly account maintenance fees, minimum account balances, and interest rates — vary slightly from one bank to another.

Comparison chart
Overview
Checking Account
A type of bank account that is designed for everyday money transactions.
SavingsAccount
An account that accrues more interest than a checking account does; intended for saving money.

Withdrawal Restrictions
Checking Account
– None
Savings Account
– Typically 3-6 withdrawals a month. Allowed to withdraw only a portion of the account balance.

Minimum Balance
Checking Account
– Sometimes, varies by bank
Savings Account
– Sometimes; varies by bank

Designed For
Checking Account
– Regular use
Savings Account
– Saving money risk-free for short- or long-term

Fees
Checking Account
– Varies by bank
Savings Account
– Varies by bank

Interest Earned
Checking Account
– Nominal/none
Savings Account
– Yes, but amount varies wildly by bank or credit union

Access
Checking Account
– Any time To use money,
Savings Account
– Account holder must first transfer it to checking account (usually)

Other Features
Checking Account
– Overdraft, external online transactions (money transfer, manual/automatic bill pay)
Savings Account
– No facilities other than internal online transactions with some banks (i.e., transfer from savings to checking)

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