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Hiya Images/Corbis/Getty Images October 13, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Karen Bennett is a consumer banking reporter at Bankrate. She uses her finance writing background to help readers learn more about savings and checking accounts, CDs, and other financial matters. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Robert R. Johnson, Ph.D., CFA, CAIA, is a professor of finance at Creighton University and chairman and CEO of Economic Index Associates, LLC. Bankrate logo The Bankrate promise
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Savings and checking accounts both help you manage money, but they differ in what they’re used for. In addition to having both accounts, it’s important to understand the different purposes they serve when it comes to managing your money in the short and long term. Checking vs savings accounts
A checking account helps you manage your day-to-day finances, such as paying your bills, receiving direct deposit of your paycheck, and withdrawing cash from an ATM. A savings account is a place for building up an or setting aside money toward a , such as an upcoming vacation. Here are the main differences between the two and why you should have both. Checking account Savings account Primary use Spending Saving Interest Sometimes, but usually minimal Yes, interest rates vary by bank Common fees Monthly maintenance fee, overdraft fee, out-of-network ATM fee Monthly maintenance fee, minimum balance charge, savings withdrawal limit fee Minimum balance Varies by bank Varies by bank Limits on transfers None Six each statement cycle, in most cases What is a checking account
are easily accessible and are used frequently for everyday transactions, such as transferring money, debit card purchases or writing checks. To make transactions convenient, checking accounts usually come with a debit card, checkbook and mobile app with payment features, such as online bill pay and Zelle. The downside, however, is that banks often don’t pay interest on funds in checking accounts. When this is the case, money in checking accounts doesn’t grow. When shopping around for a checking account, there are three key features to look for: No monthly maintenance fees (or easy ways to waive them) Free access to a large ATM network No or low overdraft fees It’s also worth finding out if a is available. You may be able to earn $100 to $500 — or more, when you open a checking account and set up direct deposit. What is a savings account
With , funds are less accessible, since these accounts are made to store money for financial goals. Checks can’t be written against them, and you’re generally limited to six free withdrawals or transfers a month from the account. Because savings accounts are not made for everyday transactions, you can store money in the account for longer to collect interest. Savings accounts — especially — typically offer higher annual percentage yields (APYs) than checking accounts, allowing you to grow your money faster. When looking for a savings account, consider these key factors: A high APY: The higher the APY, the more money you will earn. Keep in mind that savings account APYs are variable, so the bank can choose to raise or lower them at any time. Balance requirements: Some savings accounts require a high balance in order to earn the APY. Choose an account with a minimum-balance requirement that you’ll be able to maintain. Fees: Look for accounts that have no monthly maintenance fees or easy ways to waive them. Similar to checking accounts, you may also earn a bonus for simply opening a savings account. Do checking and savings accounts pay interest
A checking account should be thought of as a transactional account. Checking accounts are generally not meant for building savings and, as such, many do not earn any interest. Savings accounts will almost always pay interest. When shopping for the best savings account, it’s important to look for ones that earn a high APY. This will provide the most growth for your savings. Many banks have been raising their savings account yields as a result of the several times in 2022. The highest rates are often found at as well as credit unions. Keep in mind that rates on savings and checking accounts are variable, so the bank may change the rate amount depending on market conditions. How does Regulation D affect savings accounts
Consumers are typically limited to six withdrawals or transfers a month from savings accounts due to , a Federal Reserve requirement that distinguishes between transaction and nontransaction accounts. A savings account is considered a nontransaction account, so the number of transactions is capped and any above the limit are subject to a fee. In April 2020, however, the in response to the coronavirus pandemic. Banks now are able to suspend the regulation, allowing customers to make more than six withdrawals or transfers from a savings account each month. Banks are not required to suspend the regulation, though, and many still adhere to the limit. Whether or not the regulation is suspended at your bank, be aware of how many withdrawals or transfers you are allowed from your savings account. If the bank imposes a limit and you exceed the limit, you will be charged a fee. Is money in checking and savings accounts safe
The vast majority of deposit accounts are insured by either the . (FDIC) for banks or the (NCUA) for credit unions. The FDIC ensures that when a bank fails, depositors’ funds will not be lost. The insurance covers up to $250,000 per depositor, so for a jointly owned checking or savings account up to $500,000 would be insured. FDIC coverage is backed by the U.S. government, so if you open an account at an FDIC-insured bank, you can be assured that up to $250,000 of your money is safe. Similarly, the NCUA backs balances in checking and savings accounts but for credit unions. Like FDIC insurance, NCUA insurance covers up to $250,000 per person, per account type. To guarantee that your money is protected by the federal government, check to see whether your financial institution is insured by the FDIC or NCUA. You can confirm whether a bank is FDIC insured using the . For credit unions, check the NCUA’s of insured credit unions. Some banks may be insured by the state rather than the federal government. Should I have both accounts at the same bank
Keeping your checking and savings accounts at the same bank may be most convenient, but it can also have some limitations. Benefits of having both accounts at the same bank include: All account information is easily viewed in one statement, web page or app. You may be able to link a savings account to your checking account as overdraft protection to cover a check or debt transaction that exceeds your checking balance. In some cases, you can earn special relationship benefits, such as a higher rate or waived fees, by linking checking and savings accounts. If you choose to open both accounts with the same bank, however, you may miss out on better deals offered by other banks. For example, one bank might feature a large network of ATMs where you can withdraw money from your checking account with no fee, but its savings accounts have very low APYs. Meanwhile, an might offer great rates on its savings accounts but doesn’t have any branch accessibility. In these cases, the reward of having the accounts in separate banks may outweigh the benefits of having both in the same bank. Bottom line
Checking and savings accounts serve distinct purposes, and both are important for performing everyday transactions and building savings. When exploring savings and checking account options, consider what benefits you prioritize and what your savings goals are. Your choices will vary depending on these factors. If your focus is building savings as much as possible, then a account might be the best fit. If you value bank loyalty, then having both accounts at the same bank may offer some benefits. Use the search tools available to see if your bank is insured, so you won’t risk losing money. Make sure to look out for fees and minimums that are avoidable, and compare rates offered by different institutions. A higher rate on your savings means a better payout over time. SHARE: Karen Bennett is a consumer banking reporter at Bankrate. She uses her finance writing background to help readers learn more about savings and checking accounts, CDs, and other financial matters. Brian Beers is the managing editor for the Wealth team at Bankrate. He oversees editorial coverage of banking, investing, the economy and all things money. Robert R. Johnson, Ph.D., CFA, CAIA, is a professor of finance at Creighton University and chairman and CEO of Economic Index Associates, LLC. Related Articles