Checking vs Savings Accounts: What is the Difference?

Key Takeaways:

  • Checking accounts work best for handling frequent transactions including purchases, bill payments, and ATM withdrawals.
  • Checking accounts typically receive little to no interest.
  • Savings accounts are the best alternative for storing your money compared to other possibilities.
  • You’ll receive higher interest on your savings account.

Do you know the difference between a checking vs savings account? If not, you’re not alone. According to a recent survey, nearly 40% of Americans don’t know the difference between the two.

We look at the differences between a checking account vs savings account and how to choose the best type of account for your needs.

Savings vs Checking Account

There are a few key differences between savings and checking accounts.

Perhaps the most obvious difference is that savings accounts typically earn interest on the money you deposit while checking accounts do not.

This means that your money can grow over time if it’s in a savings account, but it will stay the same if it’s in a checking account.

Another key difference is that savings accounts typically have higher minimum balance requirements than checking accounts. This means that you may need to keep more money in your savings account in order to avoid fees.

Here’s a summary of the differences between checking vs savings accounts:

Checking AccountSavings Account
What It’s ForSpendingSaving
Typical FeesMonthly maintenance fees
Overdraft fees
Foreign transaction fees
Monthly maintenance fees
Savings withdrawal limit fees
Withdrawal LimitsNoneOften 6 per month
Other Features– Debit card
– Paper check
– Online banking
– Overdraft protection
– Direct deposit
– Earn interest
– Direct deposit
– Online banking


The fees associated with each type of account vary depending on the bank or credit union. However, there are typically no fees for opening or maintaining a checking account.

There may be fees for using certain features of the account, such as making withdrawals at an ATM that is not affiliated with the bank.

Savings accounts often have a minimum balance requirement, and if this requirement is not met, the account holder may be charged a fee.

There may also be fees for making withdrawals from a savings account.


When it comes to choosing between a checking and savings account, one of the key considerations is interest. Checking accounts generally don’t earn interest, while savings accounts do.

The amount of interest you’ll earn on a savings account depends on the account balance and the current interest rate.

The higher the balance, the more interest you’ll earn. And, in general, the longer you keep your money in a savings account, the more interest you’ll accrue.

With a checking account, you won’t earn any interest on your deposited funds. However, some checking accounts may offer perks such as rewards points or cash back on certain purchases.

Look for accounts that don’t charge monthly service fees and have rates of at least 0.50% yearly yield.

When deciding whether to choose a checking or savings account, think about how much interest you’re willing to forego in exchange for other features and benefits.

Can I Lose My Money?

Most banks and credit unions offer federally insured deposits up to $250,000 per depositor. If the account was with a bank, the money would be insured by the Federal Deposit Insurance Corp (FDIC).

The National Credit Union Administration (NCUA), however, provides federal insurance for credit unions. If a bank or credit union went out of business, your deposit wouldn’t be forfeited.

How to Choose a Checking Account

Look for accounts that either don’t charge a maintenance fee or provide a simple way to waive one. Top accounts pay interest, but rates are sometimes capped and have spending limits.

Typical checking account rates are lower than savings accounts.

The best checking accounts offer free nationwide ATM access and no monthly fees. Numerous accounts provide welcome bonuses.

Premium Features

Some banks provide premium checking account choices in addition to standard accounts for customers with sufficient assets.

These accounts provide a number of benefits, such as refunds for ATM fees and lower mortgage rates.

How to Choose a Savings Account

When it comes to choosing a savings account, there are a few things you should take into consideration. First, decide what type of account is right for you.

There are two main types of savings accounts: regular and high-yield.

Regular savings accounts offer lower interest rates but require a smaller minimum balance. High-yield savings accounts offer higher interest rates but require a larger minimum balance.

Savings Account Fees

Next, consider the fees associated with the account.

A six-per-month cap on some withdrawals was previously imposed by federal law. However, financial institutions are no longer compelled to enforce the withdrawal cap, according to the FDIC in April 2020.

Some banks charge monthly maintenance fees, while others waive these fees if you maintain a certain balance. Also be sure to look out for hidden fees, such as ATM charges or overdraft protection fees.

Finally, compare the interest rates of different banks to find the best deal. Many online banks offer higher interest rates than traditional brick-and-mortar banks.

High APYs

By making investments in accounts that offer higher-than-average interest rates, you can raise your balance.

Some checking accounts do yield interest, albeit it’s not a big deal. This is so that they can be used for expenditure rather than for significant balance growth.

It’s crucial to optimize the annual percentage yield because savings accounts are meant to grow.

The APY rate for savings accounts is only 0.07% on average. Some banks and credit unions, however, provide more.

The best savings accounts offer rates of 0.50% or more.

The effects of a higher annual percentage yield are clear to perceive. Consider you need to deposit $5,000 into a 0.05% APY account.

After a year, this money earns a little more than $3. On the other hand, if you deposited that money into an account paying 0.50% APY, you would have made $25 during the same time frame.

A high APY will reward you with more money for your work, even though it might not make you wealthy.

Alternatives to Regular Savings Accounts

To increase your interest rate, you don’t always need to create a traditional savings account. Another choice is a money-market account.

Similar to savings accounts, these accounts offer interest, but frequently also offer debit cards and check writing capabilities. Additionally, the minimum balance requirements are greater.

If you have a big amount to deposit, such as $10,000, or if you don’t expect to withdraw your money for a while, a certificate to deposit is a smart choice.

When compared to standard savings accounts, CDs offer better rates because you have to keep your money in them for a specific period of time. Frequently, CDs have larger minimum deposits.

Checking Vs Savings Account: Which One Is Right For Me?

Who Savings Accounts Are For

Savings accounts are typically for people who want to save money for a specific goal, like a rainy day fund or a down payment on a house. But anyone can open and use a savings account.

Traditional savings accounts tend to have lower interest rates but also have fewer fees. High-yield savings accounts often have higher interest rates, but they may also have more fees.

The best type of savings account for you will depend on your financial goals and how much you’re willing to pay in fees. If you’re just starting out, a traditional savings account may be a good option.

If you’re looking to earn the most interest on your money, a high-yield savings account may be a better choice.

Who Checking Accounts Are For

Most people have a checking account to cover day-to-day expenses.

A checking account is a liquid account, meaning you can access your money as you need it. This is in contrast to a savings account, which is designed for long-term savings goals.

A checking account allows you to write checks or use a debit card to pay for purchases. You can also set up direct deposit with your employer so that your paycheck is automatically deposited into your account.

Most checking accounts come with online banking and mobile app capabilities, so you can easily keep track of your balance and transactions.

There are different types of checking accounts, but the most common is the basic checking account. This type of account usually has no minimum balance requirements and comes with a small monthly fee.

If you use your debit card frequently or write a lot of checks, you may want to look into a free checking account that doesn’t charge per-transaction fees.

There are also interest-bearing checking accounts, but these typically require a higher minimum balance than non-interest-bearing accounts.

Should I Have Both Accounts At the Same Bank?

Having two accounts at the same bank or credit union has some advantages. This makes it simple for you to manage your money and quickly transfer money between accounts.

To reduce monthly costs, you can link your checking and savings accounts, although they might have a minimum balance requirement.

Pairing accounts does have certain drawbacks, though. The finest checking and savings accounts might not be offered by the same organization.

It’s possible that banks with the best savings rates don’t necessarily offer checking accounts.

If you want to increase your savings without closing your current account, you might seek to create a high-yield savings account with a different bank.

In checking accounts, debit cards are a common inclusion. This makes making routine purchases straightforward.

Final Verdict

When it comes to spending, checking accounts are a good option. But for savings that earn higher interest rates, savings accounts are best.

With so many options available, it can be hard to know which account is right for you, which is why you should compare the pros and cons of each carefully.

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Lorien is the Country Manager for Financer US and has a strong background in finance and digital marketing. She is a fintech enthusiast and a lover of all things digital.

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Last Updated: November 22, 2022

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