Checking Bank Account Vs. Savings Bank Account: What You Need To Know.

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.


Banking is an exceptional domain. It allows you keep your money in one place where it remains safe and whenever you need it, you can get it. Life has been made a lot easier through these banks and transactions and business deals are becoming more convenient by the day. However, before you open any one of the accounts, it is better to know about each and then decide which one suits your needs the more.


Many banks require checking account holders meet some criteria; for example, to set up the direct deposit of paychecks into a checking account, the account owner must usually maintain a minimum balance or make a minimum number of transactions each month. When these criteria are not met, banks often charge users monthly maintenance fees. Banks may also impose ATM usage fees, overdraft charges, overdraft protection fees to avoid overdraft charges, and fees for online access and bill paying. These vary depending on the bank, with some banks and credit unions, like Ally, charging very few fees.

Most savings accounts are fee-free, as long as owners do not exceed their withdrawal limits. However, some banks, like Bank of America, require account owners keep a minimum daily balance or make a certain number of money transfers into the savings account every month to avoid account maintenance fees.

Checking account:

Transactions with this account are supposed to be frequent, that is, deposits and credits are made more often. The way the bank facilitates the transactions is through checkbooks, debit cards and with the advancement of technology, you can now do most of these on your smartphone.

The services the bank renders you is paid for in form of a nominal. These fees are the only way the bank profits off keeping your money safe.

With these ​checkingbank accounts​, you don’t get an interest on the deposited money. However, this is the case for the majority of the ​checking accounts​,there are some that’ll pay you an interest even if you have this type of account.

Transactional: Traditional checking accounts are transactional accounts, meaning banks expect account holders to frequently take out money, with few restrictions on the timing or amount of those transactions.

To help make those transactions as convenient as possible, checking accounts typically come with the ability to make payments with a checkbook, debit card and even mobile apps.

Typically paid for by fees: Checking accounts usually carry fees for a long list of services or account holder missteps, such as not carrying a high enough balance, using another bank’s ATM or for covering an overdraft. Banks attach so many fees for two reasons:

  • Banks can’t count on your money staying in checking accounts very long, so they have to hold a greater amount of your money in reserve than they would for a savings account, and they can’t lend it out. Instead, they make money on checking accounts through fees.
  • Keeping a close eye on a lot of transactions incurs administrative costs for the banks.

No interest payments: Most traditional checking accounts don’t pay any interest to account holders, no matter how much is in the account. But you can find checking accounts that pay interest if you shop around.

Savings account:

It is mostly considered as an investment and you don’t get to access the account as often as you would a ​checking account​.

Longer-term investment: Savings accounts are closer to a form of investment than a transactional account. You’re giving a bank access to your cash, typically for longer periods than with checking, so they can loan out almost all of it to earn a return.

Harder to spend: By design, money contained in savings accounts is hard to spend directly. Savings accounts typically don’t have check-writing privileges or debit cards attached to them, so in many cases, you’ll need to withdraw or transfer it before you spend it.

Few fees: With savings accounts, banks make money off the “spread” — the difference between the interest rate they pay you and the interest rate on the loans they fund with your money. Because of that, and the fact that they don’t cost as much as checking accounts to administer, banks typically charge little, if any, fees on savings accounts.

Pays interest: Current yields on savings accounts may not be great, but they may be able to help you accumulate a little more cash over time. Shop around to make sure you get the best rate on a savings account.

The amount in the ​savings account is hard to access since these accounts don’t come with a checkbook or debit cards. You will have to get some amount withdrawn or transferred to gain access to that money.

The best part about these ​savings accounts is that the bank pays you an interest on the amount you have deposited, that is, the more the money your account holds, the more interest you get.



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