Is it better to have a checking or savings account?

Having both a checking and savings account is important. For example, many banks offer interest-bearing checking accounts, which makes it tempting to forgo a regular savings account. However, it's still a good idea to keep a separate savings account to help you build an emergency fund or save funds for short-term goals such as a vacation or a large purchase. A savings account keeps your money out of sight while still giving you immediate access, should you need it.

What is the difference between a checking and a savings account?

Essentially the difference between checking and savings comes down to short-term vs. long-term use. Checking accounts allow quick access to your funds for daily activity or to pay bills monthly. Savings accounts are generally used for a financial goal such as buying a house or saving for college.

Is a debit card for a checking or savings account?

Typically, a debit card is linked to your checking account. Your bank, credit union or financial institution could issue an ATM card with your savings account but generally don't.

Advertiser Disclosure

Checking vs. Savings Accounts: What’s the Difference?

August 19, 2024

7 min Read

Written by Jami Farkas

Edited by Caitlyn Moorhead

Happy asian woman using smartphone shopping online with credit card. Lifestyle. Easy pay using smart phone or digital device. stock photo

baramee2554 / iStock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

When it comes to managing your money, it can be tricky deciding which type of account is best for your financial needs. Knowing how varying bank accounts work will benefit you and your financial goals, no matter if you are focused on short-term necessities or long-term plans.

Quick Take: Checking vs. Savings Accounts

GOBankingRates recently did a study to determine how much the average American had in their bank accounts, both checking and savings. Here are some key takeaways:

Nearly 38% of those who surveyed have $100 or less in their checking account.
36% of those surveyed also had less than $100 in their savings account.
Almost half of Americans have less than $500 in their savings.

Checking vs. Savings: How Your Accounts Stack Up

Account Type	Checking	Savings
Features	Typically includes a debit or ATM card	May come with an ATM card
Limits	No withdrawal limits	Usually up to 6 withdrawals per month
Interest-Bearing	Available on some accounts	Standard on all accounts; annual percentage yield varies by bank
Balance Requirements	Varies by bank	Varies by bank

Checking Account Basics

Checking accounts are deposit accounts and act as the foundation of your personal banking. They allow you quick access to your funds for your day-to-day needs such as:

Writing checks
Paying utility bills
Autopay bills
Making transactions online
Swiping your debit card to buy gas or groceries

Most employers will directly deposit your paycheck into your checking account. You can also set up automatic bill pay, with funds for your cellphone, credit card and more coming straight from your account. With this convenient feature, you won’t forget to pay bills. This can help you avoid late payment fees but make sure you monitor your account to avoid overdraft fees.

Savings Account Basics

When opening a savings account, you should know that it is another type of deposit account that lets you earn interest on the money you keep at the bank. Savings accounts have withdrawal limits and are often used for a financial goal or a specific purpose. You might find them helpful when saving for a major purchase or keeping an emergency fund.

Here are some key takeaways:

High-interest savings accounts at online banks could net you even larger gains than you might get at your local bank.
Your paycheck can also be directly deposited to a savings account, but since a savings account is designed to do just that — save your money — it isn’t your best option for frequent transactions.
Many banks limit the number of free transactions savings account holders can make each month and charge a fee for exceeding that benchmark.
Some savings accounts come with monthly service fees or monthly maintenance fees.

Checking vs. Savings Accounts: What’s Better?

Checking and savings accounts are designed to meet different financial needs, so the “better” account is the one that best helps you achieve what you need to do with your money. Many may wonder “Is my money safer in a checking or savings account?” Both can carry FDIC insurance protection of up to $250,000, so a savings account isn’t any safer than a checking account — or the opposite.

Many people have multiple savings accounts. One can be for quick emergency cash, while others can be for long-term savings or to put money away for a house, wedding, vacation, car or other big expenses. That money for long-term use often is stored in online accounts that offer higher interest rates than at your local brick-and-mortar bank.

Can You Write Checks From a Savings Account?

Few banks provide checks for savings accounts since people typically don’t pay their regular expenses directly from their savings. The lack of payment tools, such as checks, debit cards and bill pay, may make it easier to build savings and harder to access money for spending. That being said there are ways you can make payments from your savings account.

Is a Debit Card for Checking or Savings?

Though most often a debit card is linked directly to your checking account, it’s important to know the difference between a debit card and an ATM card.

A debit card is issued by your financial institution when you open a bank account, and it has multiple functions. You’ll use your card to deposit or withdraw money at an ATM, or to get money back with a purchase at a retailer that offers the cash-back option.

The card, if it has a Visa, Mastercard or Discover logo on it, can be used to pay for purchases at a retailer that accepts those cards. But you’re not buying anything on credit. Instead, the money to buy that pair of shoes will come straight from your bank account. You also can shop online with your debit card.

A debit card typically is issued to owners of checking accounts. Your financial institution could issue an ATM card with your savings account. The card you’ll receive with that account is a key difference between checking and savings account usage.

Compared to a debit card, an ATM card has limited functions. It is only used to get cash back, or at some banks and credit unions, make deposits at ATMs. You can’t complete a purchase online or in a store with just an ATM card.

Should You Open Savings and Checking Accounts at the Same Bank?

It could be beneficial to have a savings account at the same financial institution as your checking account. By linking the two accounts, you can transfer money from your savings account to your checking account. The money could be used to cover a scheduled online bill or to pay a check that you have to write.

Many financial institutions also allow you to cover a check with money in your savings account, if the check otherwise would bounce. While some banks might charge a fee for that service, it will likely be lower than the fee that your bank will assess for non-sufficient funds.

Checking vs. Savings Accounts: How To Choose

Picking a checking or savings account is a personal choice. What makes one account right for you might not work for others. You can choose a basic checking account or one that’s interest-bearing. Regarding savings accounts, you can choose from a traditional savings account or a money market savings account, which typically pays higher interest and often allows for check writing.

Think about your financial goals and spending habits before choosing an account. Next, check out these features for the accounts you’re considering:

Fees: Monthly and one-time fees can quickly add up. Try to find accounts that will let you minimize them or avoid paying them altogether.
APY: For savings accounts especially, look for ones that pay the highest rates. For example, as of June 2023, you can find high-yield savings accounts that pay 5.00% APY or more.
Incentives: Some banks will pay you money just for opening an account and completing a few requirements.
Convenience: If you prefer having a brick-and-mortar location nearby, make sure the bank you choose offers one.
ATM network: Look for a bank that has fee-free ATMs near the places where you live and work.
Minimum balance requirements: There are plenty of free checking and savings accounts available. Choose one of these if you worry about keeping enough money in your account to avoid fees.

Every consumer needs a reliable bank to handle daily financial needs. Your checking account is the starting point for paying bills and everyday expenses. A savings account can be a valuable complement.

Final Take To GO

The bottom line is that the main difference between a checking and a savings account is that a checking account is used for daily transactions, while a savings account is designed to help you grow money over time. Most people find it beneficial to have both accounts at their disposal for various financial transactions since each serves a unique purpose.

Allison Hache, Caitlyn Moorhead and Cynthia Measom contributed to the reporting for this article.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.