Checking vs. savings accounts: What you should know

A smiling man takes a picture with his smart phone of a check or paycheck for digital electronic depositing.Image: A smiling man takes a picture with his smart phone of a check or paycheck for digital electronic depositing.

In a Nutshell

Checking accounts are intended for daily transactions, while savings accounts are designed to save your money and help it grow.

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Checking and savings accounts are two of the most common bank account options.

They each provide different features and benefits to help you with all your financial goals. Checking accounts are supposed to make frequent transactions like buying groceries, paying bills or depositing your paycheck easy — while savings accounts give you a place to stash your funds and build them up. Read on to learn more.

Checking accounts

Checking accounts are designed to assist you with your everyday transactions. You can access and manage your money using checks, debit cards, walking into a branch or going online. A checking account offers you a convenient and secure way to pay bills, make deposits or payments, and transfer money.

For many consumers, getting a checking account is a first step toward financial stability. Checking accounts can also help you gain access to other financial products such as savings accounts or investment accounts.

Savings accounts

Savings accounts are designed to hold money that can earn interest over time. Interest can fluctuate depending on various factors, including rates set by the Federal Reserve. Many people use savings accounts to help them build wealth or save for a specific goal, like an emergency fund.

Some of the most common short-term savings options are savings accounts, money market accounts, and certificates of deposit, or CDs. Keep in mind that, because of their more focused purpose, savings accounts may have limited functionality.

  Checking accounts Savings accounts
Designed for Daily banking needs Saving
Minimum balance requirement Varies by financial institution, some may not have any Varies by financial institution, some may not have any
Interest None to minimal Yes, varies by financial institution
Withdrawal restrictions Some financial institutions have daily withdrawal limits No more than six withdrawals or transfers per month
Monthly fees Sometimes, varies by the financial institution (fees may be waived if requirements are met) Sometimes, varies by the financial institution (fees may be waived if requirements are met)
Additional fees Overdraft fees, foreign transaction fees, out-of-network fees, money orders, cashier’s checks, check printing (varies by financial institution) Savings withdrawal limit fee (varies by financial institution)
Typical features Online access, debit card, automatic bill pay Automatic savings, linkage to a debit card for ATM access, online access

What you need to consider when selecting a savings or checking account  

Before you open a checking or savings account, be sure to review all features, fees and interest rates. This will help you select the best account for your needs.


“When opening a checking versus a savings account, a very important consideration is how often you will need to withdraw your money. Many savings accounts have a monthly limit on how often you can take money out. If you exceed that amount, it could be costly,” says Krista Cavalieri CFP®, owner and lead adviser at Evolve Capital.

Federal regulations limit you to six withdrawals or transfers per month within savings accounts, so it’s good to keep an eye on those transactions. If you exceed the number of transactions, there may be some financial consequences. Some financial institutions will charge a fee and convert your account to a non-interest-bearing checking account, or just close your account.

Checking accounts generally do not have transaction limits but may have daily withdrawal limits — which put a cap on how much you can take out of your account — at ATMs.


“Asking is the easiest way to ensure you understand what you’re signing up for,” Cavalieri says. “Be sure to ask not only about fees for excess withdrawals or low balances, but to also ask if any fees are waived if you hold a certain number of accounts or meet a criteria within the institution.”

One fee that many savings and checking accounts have is a maintenance fee. Depending on the financial institution, the amount can vary. Sometimes the fee is waived if you meet certain requirements, like holding multiple accounts with the same bank or maintaining a minimum deposit amount.

Checking accounts also have additional fees that often include overdraft fees, foreign transaction fees, money order fees, cashier’s check fees, and check printing fees. Some savings accounts apply fees if you exceed the transaction limit.

Interest rates

Typically, checking accounts earn little to no interest depending on the financial institution. Savings accounts, on the other hand, tend to earn more interest than checking accounts.

This is because savings accounts are meant to help you build your funds, while checking accounts are intended for daily use.

Debit cards

With checking accounts, you have access to debit cards to make payments or complete everyday transactions. Generally, there is not limit on the number of transactions you can complete.

Savings accounts do not provide the same luxury. Most of the time, your financial institution can link your debit card to your savings account to provide access to ATMs. However, you cannot use your savings account to pay for daily transactions, only to withdraw cash.

Do I have to pay a fee to make purchases with a debit card?

Although it’s not common, some banks and credit unions may charge you a fee if you make a purchase using your debit card. If you find this fee on your account statements or in the account’s terms, you may want to switch to one of the many banks or credit unions that offer a debit card without a purchase transaction fee.

Convenient features

Checking accounts can help simplify paying bills. You can choose to pay bills via debit card, check or online.

Savings accounts don’t allow for this, but a savings account may make saving easier with automated transfers from your checking account to savings. This way you don’t have to think about saving each month.

Bottom line

When selecting a checking or savings account, determine how often you will need to access your funds, the features you would like to have, and what fees you may have to pay. Only you can decide what account will help you reach your financial goals now and in the future.

About the author: Ashley Chorpenning is a personal finance writer and content creator. In addition to being a contributing writer at Credit Karma, she writes for solo entrepreneurs and Fortune 500 compani… Read more.