Are you new to banking, or are you just wondering how to take advantage of your accounts? Learn about checking vs. savings accounts, and what each account can do for you.
Checking Accounts
Your checking account is meant for spending. It’s designed for you to make frequent withdrawals from it. Whenever you use your debit card, a check, or an ATM, the funds are coming out of your checking account. A checking account is best for routine, everyday purchases, since you have easy access to your money.
Checking accounts generally do not earn interest. Depending on the account and usage, fees may apply, including overdraft fees and ATM fees.
Savings Accounts
Savings accounts are meant for saving, rather than spending. You won’t be able to make frequent withdrawals using your debit card or ATM. By limiting access to your money, the savings account encourages you to keep it in the same place for as long as possible. Savings accounts are best for working towards long-term goals, or building an emergency fund.
Savings accounts always earn interest, allowing your deposit to grow over time. You can withdraw from and deposit into your savings account using online banking, or in-person at a branch. Savings accounts may incur a monthly maintenance fee.
Similarities
If your job uses direct deposit, you can choose to have your paycheck deposited into your checking or savings. Additionally, you can manage both of your accounts using your bank’s online banking system. You can transfer funds from checking to savings, and vice versa. Make sure to track your spending and set up a savings plan to help you reach your goals.
Key Differences
The main difference between your accounts is that your checking is for spending, while your savings is not. Use your checking account for everyday purchases, and your savings to build a fund for your future.
Understanding your accounts and how they work can help you get closer to your goals, and you’ll be able to navigate your finances with confidence.
