Checking vs. Savings Accounts: Which Is Better for Your Financial Goals?

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When it comes to your personal finances, you need to have the right financial tools to help you best manage your money. Checking and savings accounts are common and essential financial tools provided by most banks. To decide which is better for your financial goals, let’s look at the features in each and how it works.

What is a Checking Account?

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A checking account is typically used to make payments. As the name suggests, you can make payments using paper checks, but with the evolution of financial transactions, you can now make wire transfers or use a debit card to make payments from your checking account. One advantage of using a checking account is flexibility because they often have fewer restrictions than a savings account.

Checking accounts rarely offer any interest on money, and when they do, it’s very negligible. Depending on the bank, checking accounts have a small monthly fee. However, some banks eliminate the expense once the client meets specific requirements.

What is a Savings Account?

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As the name insinuates, a savings account is where you put money that you don’t need to access immediately or soon. It is an excellent financial tool when you want to make a little extra money as there’s an interest rate. Additionally, many savings accounts don’t have debit cards or checks.

However, if you need to make deposits from your salary account, you can do this electronically using the account’s routing number. You could use the routing number to pay your monthly bills, but this counts towards the limited number of withdrawals limit, so it’s not advisable. It’s better to use a checking account for frequent payments.

Main Differences Between Checking and Savings Accounts

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Although checking and savings accounts have some similarities, they have several significant differences.

Purpose of Account

The main difference between a checking and savings account is the purpose of each option. Checking accounts are transactional accounts. You’d typically use a checking account to make payments like utility bills, buy something online or pay for a concert ticket. 

A savings account, on the other hand, is like a storage unit. You keep money that you don’t need to use immediately or stash it there when working towards a particular goal like buying a house or a car. You can also use it as your emergency fund because it’s relatively easy to access your funds, unlike other saving and investment tools, provided you don’t go above the monthly withdrawal limit.

Withdrawal Limits

A checking account does not have a limit on the number of times that you can withdraw. However, there are daily limits on the amount of money you can withdraw from an ATM. The specific limit figure varies depending on the bank, but the general range is between $300 and $1000.

According to the Federal Reserve Board Regulation D, you cannot make more than six withdrawals or fund transfers from your savings account in one month. Making more than six withdrawals can attract penalty fees, account closure or the conversion of your savings account into a checking account. 

However, there are ways to get around the six times limit rule by transferring funds through a bank teller or ATM or asking the bank to mail you a check from your savings account. You need to speak to your bank first before trying to make the seventh withdrawal from your savings account.


Checking accounts don’t typically yield interest, but some banks offer this feature, although the interest rate is significantly lower than savings accounts. Interest is one of the main features associated with savings accounts. The interest rates rely on the kind of savings account and also differ from bank to bank. Typically, the annual percentage yield (APY) that saving accounts offer is less than 1%.


Checking accounts generally have a maintenance fee, but some are free. Before opening a checking account with any bank, it’s important to consider this factor. You could also pay a fee if you overdraw from your checking account, use your debit card in another bank’s ATM or when you don’t maintain the minimum account balance. Some banks waive fees if a customer meets specific age requirements, like being over 65 years or below 18 years.

When it comes to a savings account, you could pay fees for making excessive withdrawals. Different banks have different regulations and fees for withdrawing past the six-withdrawal limit. Saving accounts typically have a minimum deposit, and many have a minimum balance. You could pay a fee if your account doesn’t carry the minimum balance. Many banks also have a monthly maintenance fee.

Can You Have Both a Checking and Savings Account?

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Checking and savings accounts have different features and different purposes but are both essential for most people. A checking account helps you manage everyday finances, while a savings account helps you save money towards a significant short-term or medium-term financial goal. A savings account is a superb way to keep your emergency fund. 

Banks often offer joint checking and savings accounts so that customers can have all their money in a central place. The two accounts each have routing numbers to allow the customer to conduct various transactions with ease. You, however, don’t have to keep both accounts with the same bank. Although having both of them in one bank provides ease, having them at different banks provides better financial security. 

Additionally, just because a bank offers both checking and savings accounts doesn’t mean that they have the best features for both accounts. You need to factor in the fees and interest rates associated with each account to determine which bank gives you the best deal. Ultimately, picking either a checking or savings account over the other depends on individual financial goals. However, both accounts serve different purposes and can run concurrently.