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The Difference Between a Checking and Savings Account

By Sarah Li Cain · September 20, 2021 · 4 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

The Difference Between a Checking and Savings Account

When it comes to managing everyday finances, some people might wonder what type of account is best. Understanding the difference between checking and savings accounts and how to use them is a good place to start.

In a nutshell, checking accounts are designed for frequent banking transactions such as monthly bills, while savings accounts are not usually accessed as often, instead perhaps used to hold money being saved to meet a short-term goal or as an emergency fund.

Let’s take a closer look at the difference between a checking account vs. a savings account and which one might be a good choice for a person’s particular financial needs—it could be both.

Checking vs. Savings Account: Key Differences

Checking Account

Saving Account

Fees Varies Varies
Interest earnings Minimal (if at all) Yes
Debit card access Yes No
Check writing capabilities Yes No
Withdrawal limits None Typically 6 per month
Maintenance fees Variese Varies
Minimum opening balance Varies Varies
Best used for Spending Saving

Although there are similarities between savings accounts and checking accounts, such as varied minimum opening deposits, maintenance fees, and other monthly fees, three major differences lie in how account holders access their money, withdrawal limits, and interest earnings.

Interest Earnings

When it comes to earning a bit of a return on an account balance, savings accounts typically offer a higher interest rate than checking accounts. In many cases, checking accounts aren’t interest-bearing, meaning no interest is earned at all. Interest rates for savings accounts vary, from a current average of 0.06% APY (compared to a current average of 0.03% APY for checking accounts).

Recommended: APR vs. Interest Rate: What’s The Difference?

Debit Card Access

Checking accounts are typically used by account holders to frequently access their cash and will generally include a debit card which can be used for purchases or ATM withdrawals. Savings accounts, on the other hand, don’t usually come with debit cards. Some financial institutions offer an ATM card for deposits and withdrawals to a savings account.

Withdrawal Limits

Checking accounts allow unlimited withdrawals, whereas savings accounts typically allow up to six, after which the transaction could be denied or the account holder charged a penalty.

However, the Federal Reserve in April 2020 lifted the limitation imposed through Regulation D. Financial institutions are no longer required to limit savings account withdrawals or transfers to six per month, but some may continue to impose the limit.

What Is a Savings Account?

A savings account is an account held at a financial institution such as a bank or credit union—its primary purpose is to store your funds safely. Most savings accounts allow the account holder to earn interest on the account balance.

Savings account rates are generally higher than those offered with checking accounts, so they can be a good option as a savings vehicle for money that the account holder doesn’t need to access frequently. Common uses for savings accounts are emergency funds, short-term savings goals, and funds for occasional expenses. The cash can accumulate in the savings account and have an opportunity to earn interest.

As mentioned above, banks can still impose a per-month transaction limit on savings accounts—they’re just not required to by the Fed anymore. There could be fees imposed on these excess transactions, which can add up.

Some financial institutions may automatically close an account holder’s savings account or convert the savings account to a checking account if too many withdrawals are made each month on a regular basis.

Other financial institutions don’t charge a maintenance fee or require account holders to maintain a minimum account balance, although they may require a minimum deposit to open an account.

What Is a Checking Account?

A checking account is also held at a financial institution, though its primary purpose is to be used for everyday spending. These accounts generally don’t have any withdrawal limits, so account holders can make as many transactions as their heart desires.

Checking accounts may not earn as much interest compared to savings accounts, if they earn any interest at all.

Checking accounts also typically comes with a debit card so account holders can access their money in a variety of ways. This includes making purchases at brick-and-mortar and online retailers and withdrawing cash from an ATM.

Checking account holders may also be able to use paper checks, either complimentary or purchased by the account holder, which can be used to pay bills and make purchases.

Many financial institutions charge the same types of fees for checking accounts and savings accounts, such as monthly maintenance fees. Additional checking account fees may include overdraft or non-sufficient funds fees and out-of-network ATM fees.

Having enough money in the account and sticking with in-network ATMs are good ways to avoid charges like these, but banks are required to disclose certain fees it charges, so it’s also a good idea to look at the fee schedule for any particular type of account you are thinking of opening.

Recommended: How Much Are ATM Fees?

The Takeaway

Both types of accounts, checking and savings, may be equally important to have depending on a person’s financial needs. They serve different purposes and can be useful in working toward different financial goals.

Looking For Something Different?

A cash management account like SoFi Money® may also be a good option for some people. SoFi Money account holders can spend, save, and earn all in one place—all without paying account fees. With a convenient mobile app, your account can be managed from wherever you are.

Get started with SoFi Money.

Photo credit: iStock/AleksandarNakic


SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
As of 6/9/2020, accounts with recurring monthly deposits of $500 or more each month, will earn interest at 0.25%. All other accounts will earn interest at 0.01%. Interest rates are variable and subject to change at our discretion at any time. Accounts opened prior to June 8, 2020, will continue to earn interest at 0.25% irrespective of deposit activity. SoFi’s Securities reserves the right to change this policy at our discretion at any time. Accounts which are eligible to earn interest at 0.25% (including accounts opened prior to June 8, 2020) will also be eligible to participate in the SoFi Money Cashback Rewards Program.
The SoFi Money® Annual Percentage Yield as of 03/15/2020 is 0.20% (0.20% interest rate). Interest rates are variable subject to change at our discretion, at any time. No minimum balance required. SoFi doesn’t charge any ATM fees and will reimburse ATM fees charged by other institutions when a SoFi Money™ Mastercard® Debit Card is used at any ATM displaying the Mastercard®, Plus®, or NYCE® logo. SoFi reserves the right to limit or revoke ATM reimbursements at any time without notice.
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