Checking vs Savings Account: What’s the Difference?

If you haven’t delved too deeply into the financial services offered by the banking sector, you might be wondering what exactly is the difference between checking and savings accounts.

In this checking vs savings account roundup, we will discuss these two types of accounts side by side and also shed light on their upsides and downsides.

First, let’s cover each account type and see what their primary purposes are.

What Is a Checking Account?

It is a personal account used for the handling of day-to-day finances. The main purpose of a checking account is to make payments and withdraw cash for everyday expenses. Since checking accounts aren’t really meant for saving, they usually don’t come with any interest.

What Is a Savings Account?

Savings accounts are personal accounts you open to keep your money safe and let it accrue interest.

They’re meant for long-term holding and not cash withdrawals and bill payments. Since the purpose of a savings account is to keep the money safe and set it aside for emergencies and future plans, there are limits on withdrawals. Savings accounts always have interest rates.

Checking vs Savings Account: Side by Side Comparison

Now that we’ve made a basic overview of these types of accounts let’s analyze them side by side. For that purpose, we’ve prepared a comparison chart that should clear up the difference between checking and savings account.

Checking Savings
Primary use Spending (paying bills, regular purchases) Saving (monetary growth, long-term investments, setting money aside)
Interest None or very nominal Yes
Fees Maintenance fee (sometimes waived)

Overdraft charges

Fee for out-of-network ATM usage

Maintenance fee

Withdrawal limit fee

Minimum balance charge

Minimal balance Varies by bank Varies by bank
Withdrawal limit None Usually six withdrawals per month
ATM access Yes No
Paper checks Yes No


This snapshot should have helped you understand the difference between a savings and a checking account.

Advantages and Disadvantages of Checking Accounts

Now, let’s examine both of them in detail.

We’ll cover all types of checking accounts (traditional, joint, online, business, etc.) and provide a comprehensive overview that will answer all your questions.

Advantages of a Checking Account

Here are some benefits that come with having a checking account.

Easy Access to Your Money

If we were to point out the best thing about a checking account, we’d say it’s easy and instant access to the holder’s money. Checks, debit cards, and online transactions are all simple and quick and come with pretty much every checking account. Easy access is handy for everyday purchases, paying bills, and making payments to other individuals. In short, opening a checking account allows holders to streamline their spending.

Your Money Remains Safe

Many people ask what is the point of having a checking account if it doesn’t increase your balance with a nice interest rate. For one, accruing interest isn’t the purpose of a checking account. It’s primarily useful because it allows holders to keep their money in a safe place. The majority of checking accounts are FDIC insured. This means that you don’t have to worry about your balance no matter what happens to the bank itself.

It’s Easier to Keep Track of Spending

If your monthly spending involves cash that’s not on a bank account, you will need to keep track of every payment made yourself. When you link those expenses to a checking account, you don’t have to put in too much effort in tracking spending. All types of bank accounts provide bank statements, transaction history, and other information that can help you to keep track of every single expense.

Offers Cashless Dealing

Are you fed up with looking for cash in your pockets and wallets? If so, you need a checking account. An account with any reliable bank enables you to go completely cashless. With POS transactions via debit cards and online transfers, you’ll never have to worry about having cash on hand again.

If you have bad credit and are looking to open a bank account, you can check our article that can help you pick the best checking account for your credit rating.

Disadvantages of a Checking Account

Of course, checking accounts aren’t perfect and aren’t suitable for every purpose. You also need to know what their downsides are.

No to Little Interest

Checking accounts are meant for spending. Therefore, holders usually don’t leave too much money lying idle in them. The thin deposits and quick transactions make it difficult for banks to offer an interest rate on checking accounts. However, while traditional banks still stick to no or very minimal interest rates on checking accounts, some online banks have started offering some decent interest rates on checking accounts as well.

Monthly Maintenance Fees

Different banks have different rates for different types of checking accounts. While there are banks that don’t charge anything, quite a few do. And if you have multiple checking accounts, maintenance expenses can really add up. Since most checking accounts offer little to no interest, paying a maintenance fee feels like subtracting a sum from your deposit.

Minimum Balance

Many banks require account holders to maintain a certain minimum balance in their checking accounts. If they don’t maintain it, they have to pay a fee. Fortunately, banks are starting to remove this rather archaic requirement, so this particular disadvantage is unlikely to come up.

Advantages and Disadvantages of Savings Accounts

Just like checking accounts, savings accounts have their own particular quirks, and not every savings account is made equal. The main purpose of a savings account is saving money and accruing interest.

Advantages of a Savings Account

Before we move to discuss the unique advantages of this type of account, let’s quickly list the beneficial checking account and savings account similarities:

  • Like checking accounts, savings accounts are also FDIC insured
  • You can keep your money in a safe place
You Can Protect and Grow Your Money at the Same Time

The best thing about savings accounts is that your money doesn’t sit idle. It continues to grow at the interest rate determined by the bank. Any extra cash you have and don’t require in the near future, you can deposit it in your savings account.

A savings account will not just safely keep that accumulated amount for your rainy days. A savings account, by definition, is an account that helps you save and add some value to your assets. If you open a savings account that offers compound interest, you will experience a significant uptick in your principal.

Check out our analysis of the best high-interest savings account options for this year.

It Is Among the Most Liquid Investment Options

When it comes to investments, you mostly need to transform your money into assets and other tangible items. This significantly reduces your overall liquidity. This is where both an interest-bearing checking and any savings account shine. Since money isn’t locked into an asset, it remains fairly accessible, and you can easily liquidate all or part of it, depending on the specifics of the account and the contract with the bank.

It Can Help You Control Your Uncontrollable Spending Habit

With the convenience provided by debit cards and online transfers of checking accounts, many people spend more than they can afford. Putting money into a savings account can help stem uncontrolled spending thanks to withdrawal limitations.

Disadvantages of a Savings Account

Despite the many benefits, including relatively high liquidity, saving accounts still have disadvantages in terms of ease of use and accessibility.

Withdrawal Limits

Federal regulations restrict savings accounts for six withdrawals per month. In addition to that, some banks set their own savings account withdrawal limit policy. If you don’t adhere to those limits, you will have to pay additional fees that may outstrip what you would have earned in interest.

Not the Best Banking Product When It Comes to Interest Rates

Even the best savings accounts are often not as good as certificates of deposits and money market accounts when it comes to interest rates.

Rates Can Change

Banks can change the interest rates on their savings accounts in line with the changes in federal rates. This can go both ways. You might get an increase or a decrease, but the added risk may isn’t suitable for every account holder.

Wrap up

As you can see from this checking vs savings account analysis, comparing these types of accounts as competing products isn’t the right way to go about it. The difference between checking and savings account stems from the fact they’re different banking services that are meant for different purposes. In general, people who are earning more than their living expenses should open both checking and savings accounts. Having both accounts will help them streamline their spending and set aside money for emergencies and future expenses.


Should I open a savings account?

Yes, everyone who wants to create a useful barrier for spendings and put aside some money for emergencies should open a savings account.

How much money should I have in my checking account?

You should have enough to cover the two months of living expenses at all times. This will make your day-to-day transactions much easier while letting you access your money quickly for minor emergencies. Also, you’ll definitely avoid minimum balance fees, should your bank still charge them.

Do checking accounts earn interest?

Some do, but the amount is fairly small. If your aim is to earn interest, you should consider opening a savings account.

Can you write checks or pay bills directly from a traditional savings account?

No, you can’t write checks or pay bills directly from a traditional savings account. Using it in such a manner defeats the purpose of having a savings account.

What makes a checking account more convenient than a savings account?

There are no withdrawal limits with checking accounts. Also, you can use your deposits in your checking account through checks, debit cards, and online transfers. These features make any checking account more convenient for everyday spending than a conventional savings account.

Which type of account is typically the most liquid?

A traditional checking account is more liquid than a traditional savings account. Comparing checking vs savings account liquidity is simple because checking accounts aren’t bound to withdrawal limits, while most savings accounts will allow you only six monthly withdrawals, at best. In addition, debit cards, checks, and online banking services that come with checking accounts make spending money even easier.


I’m an English literature graduate and an avid reader with a passion for languages. My career as a translator, editor, and writer has allowed me to learn about a wide range of topics — making me something of a jack-of-all-trades when it comes to content. I have also developed a keen eye for detail, which is essential when it comes to polishing articles. In my spare time, I read, play video games and boardgames, and run/play tabletop RPGs.

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