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Checking vs. Savings Accounts

Banking, Banking Basics
checking vs savings

Checking and savings accounts are offered by banks and credit unions, but they have different benefits. Knowing how they compare can help you make smart decisions about where you should put your money.

Checking vs. savings: The bottom line

  • Checking account: best everyday account; unrestricted access to funds; typically earns less interest
  • Savings account: good for earning interest; less access to funds

Keep reading for the full details.

Checking accounts

Use for daily spending

When you want easy access to your money — to pay bills, for example — checking accounts are ideal.

You can make transactions in many ways, including online transfers, ATMs, debit card purchases and personal checks.

Checking accounts tend to pay low to no interest, however. If you have cash that you don’t need to spend right away, your money could grow faster in a savings account.

» MORE: Best checking accounts

Savings accounts

Better rates and some access to funds

Savings accounts typically have higher interest rates than checking.

You can also access your funds easily — unlike, say, a certificate of deposit, which has early-withdrawal penalties. But savings accounts aren’t meant for everyday purchases.

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.

A basic 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 can consider other savings options such as CDs and money market accounts. They have stricter requirements but usually offer better rates in return.  And unlike investments, earnings are guaranteed.

» MORE: Best savings accounts

Checking and savings accounts serve various purposes, including easy access to funds for paying bills or as a means of growing your money. Understand their differences, and you can make the best use of both.

Margarette Burnette is a staff writer at NerdWallet, a personal finance website. Email: mburnette@nerdwallet.com. Twitter: @margarette.