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Checking vs. Savings Accounts: The Difference and How to Choose

Checking accounts are best for spending needs. Savings accounts have higher interest rates, so they're best for stashing cash.
Oct. 1, 2018
Banking, Banking Basics
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Checking vs. savings accounts

The difference between checking and savings accounts comes down to access to your money.

Checking accounts are better for everyday transactions such as purchases, bills and ATM withdrawals. They typically earn less interest — or none.

Savings accounts are better for storing money and earning interest, and because of that, you have a monthly limit on what you can withdraw. Jump ahead to see how much interest your savings could earn.

» Ready to compare savings? See our best high-yield savings accounts list

CHECKINGSAVINGS
General use
SpendingSaving
Withdrawal limits
NoneSix per month
(excluding in-person and ATM withdrawals)
Does it pay interest?
Sometimes; typically minimalYes; interest rates vary
Common fees
  • Monthly maintenance fee (with ways to waive it).
  • Overdraft fee.
  • Out-of-network ATM fee.
  • Foreign transaction fee.

  • Some checking accounts don't have all these fees.
  • Monthly maintenance fee (with ways to waive it).
  • Savings withdrawal limit fee.

  • You can find some savings accounts that don't have these fees.
    Minimum balance requirements
    Varies
    Typical features


  • Debit card.
  • Paper checks.
  • Direct deposit.
  • Overdraft protection.
  • Branch and ATM access.
  • Online and mobile banking services (bill pay, balance inquiries, transfers, account alerts, mobile check deposit).


  • Branch and ATM access.
  • Direct deposit.
  • Online and mobile banking services (balance inquiries, transfers, account alerts, mobile check deposit).
  • Checking accounts

    The benefit: Checking accounts, which offer debit cards and checks, are made for spending.

    The downside: They tend to pay low or no interest, so you want to stash your reserves in a savings account.

    The best checking accounts tend to have no monthly fees (or easy ways to waive them) and free access to nationwide ATM networks. Some even have sign-up bonuses.

    Savings accounts

    The benefit: Savings accounts typically have higher interest rates than checking, making it easy for you to grow your money faster.

    Per federal limits, you can make transfers and some withdrawals only six times a month.

    The downside: You can’t transfer or withdraw money all the time. In fact, per federal limits on savings withdrawals, you can take money out of savings accounts only six times a month via online banking, among other methods. Going over that limit can result in a fee or, if you do it multiple times, your bank might convert the account to checking.

    How to choose the best checking and savings accounts

    Look for accounts that earn high interest rates and have low service fees. If you pay a monthly service fee for a checking or savings account, you could lose money, so avoid maintenance charges if possible. There are many accounts that offer free checking and savings, and some of them also have competitive rates.

    The value of high APYs for savings accounts

    The average APY on interest checking accounts is 0.06% APY, while the average savings account APY is just 0.10%. However, some banks and credit unions have savings accounts that earn more than 20 times the average.

    When you put your money in an account that earns above average interest, you can grow your balance faster over time, without extra effort.

    Say you deposit $5,000 in an account that earns 0.10% APY. After a year, that money earns about $5. But if you deposit the cash in an account that earns 2.00% APY, you would have about $101 in the same period.

    The best savings accounts have rates higher than 2.00% as the annual percentage yield. Below are how three accounts with competitive interest compare.

    Goldman Sachs Bank USA

    at Goldman Sachs Bank USA,

    Member, FDIC

    NerdWallet bank rating:
    4.0 NerdWallet rating
    NerdWallet bank rating:
    4.0 NerdWallet rating
    Discover

    at Discover,

    Member, FDIC

    NerdWallet bank rating:
    4.5 NerdWallet rating

    APY

    2.15%





    Monthly fees

    $0





    Bonus features

    Excellent CD options



    APY

    2.15%





    Monthly fees

    $0





    Bonus features

    Large ATM network



    APY

    2.10%





    Monthly fees

    $0





    Bonus features

    Solid CD options



    See more high-yield savings accounts

    A regular savings account isn’t your only option for earning more interest. If you don’t expect to withdraw your money for several months, or have a large amount to deposit — say, $10,000 or more — you could consider other savings options such as CDs.

    Certificates of deposit have stricter requirements but usually offer better rates in return. And unlike investments, earnings are guaranteed.

    How much interest your savings could earn

    Are savings and checking account interest rates fixed?

    No, rates are variable, meaning they can change over time. Our roundup of best banks for checking and savings shows accounts that have consistently high rates.

    Could I lose my money in a checking or savings account if the bank fails?

    Deposit accounts at most banks and credit unions are federally insured up to $250,000 per depositor. If the account is with a bank, the funds would be insured by the Federal Deposit Insurance Corp., while credit unions are federally insured through the National Credit Union Administration. If a bank or credit union were to go out of business, you would not lose your deposit, up to the insured amount.

    » Want to know more about how your funds are protected? Read how FDIC and NCUA insurance programs work

    Checking and savings accounts at the same bank

    The benefits: Having both accounts at the same bank can make it easy to manage your money and transfer between accounts typically within minutes. Some banks also waive monthly fees if you link up checking and savings. We’ve also analyzed banks for those with checking and savings accounts that rate well. See our roundup of best banks for checking and savings.

    Pairing them makes things simple and convenient, but you may not find the best checking and savings at the same bank.

    The downside: You may not find the best checking and best savings accounts at the same place. For example, banks with some of the highest savings rates don’t always offer checking.

    If you’re ready to maximize savings but don’t want to change up your current accounts, consider opening a high-yield savings account at a different bank. Just make sure you have enough money in both banks to avoid fees.

    See our monthly roundup of banks that are offering high savings rates right now.