July 25, 2018

Checking vs Savings Account: What is the Difference?

A checking account is for everyday use, while a savings account has less flexibility but higher interest rates. Read on to learn more.

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Banks offer two basic types of deposit accounts for your money: checking and savings.

A checking account is designed for everyday activity and transactions. A savings account is intended to let your funds grow over time.

Let's start with a quick peek at the basics.


Checking and savings are safe, smart alternatives to hiding wads of cash in your sock drawer. Here's what to know about both.

  • Take note of account minimums. Banks may charge a monthly service fee for each account. That charge can usually be waived if you maintain a specified minimum account balance, schedule regular direct deposits, or meet other criteria.

  • FDIC secured. Each account is insured by the Federal Deposit Insurance Corporation (FDIC). This means that in the VERY unlikely event that your bank folds, the government will make sure you still get your money back, up to a total of $250,000 per depositor.

  • Both are easy to open. Opening either type of account can be done in person or online depending on your bank. All you need is your basic information (name, address, Social Security number), a driver's license or current ID, and the minimum opening deposit amount.

If you're considering opening a personal checking or savings account, you must check out these promotions.

Despite their similarities, checking and savings accounts serve different purposes and have unique features. Choosing the right account really depends on your personal needs.

Tip: Many banks offer bonuses for opening a new account. Check out a list of the best bank promotions that do NOT have a direct deposit requirement.

Features of a Checking Account

A checking account is designed to be your everyday spending account. Think of it as a digital wallet. Here's what you get.

  • Flexible money access. The money in your checking account is meant to be spent, not saved. You can freely use the money in your account at any time with no limits.

  • Debit cards. You'll get a debit card, which allows you to make ATM withdrawals or purchase items directly using the funds in your checking account.

  • Check writing. Banks usually provide checks (sometimes for a small fee).

  • Online bill pay. Most banks also offer unlimited free online bill pay. You can pay mortgage, credit card bills, utilities, student loans, etc., using the money you keep in your checking. You can set up automatic recurring payments or make one-time payments.

  • No limits. Checking accounts have no monthly withdrawal or transfer limits. (Some banks do have a maximum daily ATM withdrawal limit.)

Many checking accounts even feature "overdraft protection." This is a temporary line of credit that kicks in if you spend more money than you have available.

Checking accounts, however, offer little or no interest. There's no real benefit to keeping money there that you don't intend to spend in the immediate future. In fact, you're actually losing money that could be earned in an interest-bearing savings account.

Compare Checking Accounts


    Chase Sapphire℠ Checking

    • Enjoy a $1,000 welcome bonus when you join Sapphire℠ Banking. Within 45 days, transfer a total of $75,000 or more in qualifying new money or securities to a combination of eligible personal checking, savings and/or investment accounts, (excludes any J.P. Morgan retirement accounts and CDs) and maintain that balance for 90 days.
    • Enjoy a new kind of banking experience
    • No ATM fees worldwide - down the street or around the globe
    • Perks that add up - relationship rates, special access and help when you need it
    • Open online in minutes
    • Email my upgrade code
    • Available in: AZ, CA, CO, CT, DC, DE, FL, GA, IA, ID, IL, IN, KY, LA, MA, MD, MI, MS, NH, NJ, NM, NV, NY, OH, OK, OR, PA, RI, TN, TX, UT, VA, WA, WI, WV
    Axos Bank

    Rewards Checking

    • Up to 1.25% APY
    • No minimum balance requirements
    • No fees to open or maintain account
    • Overdraft Protection
    • Daily Compounding Interest
    • FDIC insured
    Discover Bank

    Online Checking Account - Earn Cash Back

    • 1% cash back on up to $3,000 in debit card purchases each month
    • No fees
    • Access to over 60,000 no-fee ATMs in the U.S.

Features of a Savings Account

Savings accounts are a place to save your money and have it grow over time. It's a great place to store an emergency fund and the savings for your goals.

Here's what you can expect.

  • Higher interest rates. Savings accounts will typically offer higher interest rates than checking accounts. Banks reward you for keeping your money right where it is, rather than moving it around or spending it on bills or daily purchases.

  • No caps on deposits. You can add to your balance as much as you like. You can also check your statement every month and see how much interest is accruing.

  • Limits on withdrawals and transfers. The federal government limits the number of withdrawals and transfers from your savings to 6 per month. Banks charge varying (and sometimes steep) fees for every transaction above that number.

  • Limited access. You can't directly use the money in your savings. For example, your savings account will not allow you to pay bills directly from your account. For that, you'll need to transfer money into a checking account.

    Some banks may offer an ATM card to allow withdrawals from your savings. But unlike a debit card, these cannot be used to make purchases. Others require you to visit one of their branch locations to take out some of your money.

Compare Savings Accounts

    Discover Bank

    Online Savings Account - Earn 1.80% APY

    • No fees
    • No minimum opening deposit
    • No minimum balance required

    Chase Total Checking® + Chase Savings℠

    • Enjoy up to $350 when you open a new Chase Total Checking® account with Direct Deposit and/or open a new Chase Savings℠ account, deposit $10,000 or more in new money and maintain a $10,000 balance for 90 days
    • Enjoy a $200 bonus when you open a new Chase Total Checking® account and set up direct deposit
    • Enjoy a $150 bonus when you open a new Chase Savings℠ account, deposit a total of $10,000 or more in new money within 20 days, and maintain a $10,000 balance for 90 days
    • Access to 16,000 Chase ATMs and nearly 5,000 branches
    • Apply online in minutes. Open your account online now.
    • Chase Mobile® app - Manage your accounts, deposit checks, transfer money and more -- all from your device.
    • Available online nationwide except in Alaska, Hawaii and Puerto Rico. For branch locations, visit locator.chase.com.

Why Not Both?

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If you can afford the minimum initial deposits, opening a checking AND savings account is the best option.

  • You need a checking account for everyday transactions, like purchases and bill pay.

  • You need a savings account for short- and long-term goals, whether that's a new car, your first home, or a special vacation. A separate savings account will also help you keep track of that money.

Many banks offer linked accounts. Some even waive their monthly fees as an incentive for opening both. You'll get a debit card that allows access to each account from affiliated ATMs, which makes managing your money easier.

Keeping a linked checking and savings may also spur you on to better savings habits.

You can schedule automatic transfers from your checking account into savings. Or simply transfer funds when your checking account balance reaches a target level.

But be sure to leave enough money in your checking for outstanding bills and expenses!

Bottom Line

A checking account is necessary for everyday use of your money. A savings account is meant to be a place for saving money toward your goals.

Note: Interest rates, fees and minimum balances vary DRASTICALLY depending on the bank or credit union. Choosing where to save your money matters as much, if not more, than deciding the right kind of account for you.

Check out our top online checking accounts and online saving accounts.

Disclaimer: Opinions expressed here are author's alone. Please support CreditDonkey on our mission to help you make savvy decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.

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Best Online Savings Account

Best Online Checking Account

How Much Should I Save?

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