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Checking vs Savings Accounts: All About the Differences

By Sarah Li Cain · June 22, 2022 · 6 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

Checking vs Savings Accounts: All About the Differences

When it comes to managing everyday finances, some people might consider what type of account is best. Or they might ponder if they need more than one kind of bank account. Understanding the difference between checking and savings accounts and how to use them is a good place to start figuring that out.

In a nutshell, checking accounts are designed for frequent banking transactions such as paying monthly bills, making daily purchases with a debit card, and conducting other transactions involving spending. Savings accounts, on the other hand, are not usually accessed as often. They are instead typically used to hold money being saved to meet a short-term goal (think next summer’s vacation) or as an emergency fund.

Let’s take a closer look at how a checking account vs. a savings account stacks up. We’ll consider which one might be a good choice for a person’s particular financial needs — it could be both — by diving into:

•   The key differences between checking and savings account.

•   What is a savings account and what benefits it offers?

•   What is a checking account and what benefits it offers?

Checking vs Savings Account: Key Differences

To help you understand the differences between checking and savings accounts, here is a chart summarizing the details.

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 Varies Varies
Minimum opening balance Varies Varies
Best used for Spending Saving

There are similarities when you compare savings accounts vs. checking accounts, such as varied minimum opening deposits, maintenance fees, and other monthly fees. That said, there are also three major differences: 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 online bank account, 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. The current average is 0.07% APY (compared to a current average of 0.03% APY for checking accounts), according to the Federal Deposit Insurance Corporation, or FDIC. You probably will find higher rates at online banks instead of bricks-and-mortar ones. By not having physical locations, online banks save money and can pass savings onto their customers.

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

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Debit Card Access

Checking accounts are typically used by account holders to frequently access their cash, whether paying monthly bills or buying a latte. Checking accounts 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 have typically allowed up to six per month. After that point, the transaction could be denied or the account holder charged a penalty. The bank might even convert the savings account into a checking account.

However, in April 2020, the Federal Reserve lifted this 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 maximum. Check with your financial institution to learn the full story.

What Is a Savings Account?

If you’d like to tease apart the differences of savings vs. checking accounts a bit more, let’s take a closer look. 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 (if those pay any interest at all). For this reason, 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. It’s wise to check with your financial institution to make sure you understand the ground rules.

Benefits of Savings Accounts

Here are some of the upsides of opening and maintaining a savings account:

•   Savings accounts are low-risk, which means you are unlikely to lose money. Rather, you are likely to make money, thanks to interest, especially when that interest compounds.

•   Interest is a plus. Right now, interest rates are fairly low, often well under 1%, but at least you are earning something. And by shopping around for high-yield accounts, you may be able to get a better return without the volatility of investing in, say, stocks.

•   Savings accounts are usually insured by the FDIC for up to $250,000 per account holder, per account type. In the unlikely event of your bank going out of business, you’d be covered.

•   Easy access is another plus. Unless term or time deposits, in which your money can be locked up for a specific period of time, savings accounts allow for easy withdrawal of your funds.

•   Peace of mind can come with savings. Having a savings account can help you feel more secure as you work toward your financial goals. For instance, you’ll know that you have funds available if an emergency cropped up.

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.

•   Debit cards typically come with checking accounts, and can be used for purchases at bricks-and-mortar and online retailers and to withdraw 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.

•   Account holders may also access their funds by P2P platforms and other means.

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

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. Take a look at the fee schedule for any particular type of account you are thinking of opening and get acquainted with the details.

Recommended: Ways to Avoid Overdraft Fees

Benefits of Checking Accounts

There are many advantages to having a checking account, including:

•   You can pay bills and transfer funds online, in person, or by app; there’s no need to carry around cash for such transactions. Checking accounts can make money management very convenient.

•   Checking accounts are typically insured by the FDIC (or, if you bank with a credit union, by the National Credit Union Administration, or NCUA), so your money is safe. Even if the financial institution were to go out of business, you wouldn’t lose your money up to $250,000.

•   Checking accounts can be an affordable way to conduct financial transactions. For instance, your account is likely to come with checks, which can save you the effort and expense of using money orders or other types of payments in many situations.

•   Your checking account may offer rewards, such as cash back opportunities, or if you apply for a loan at the same institution, you may get a better rate.

Recommended: How Much Are ATM Fees?

The Takeaway

Yes, there are significant differences between checking and savings accounts. They serve quite separate purposes and can be useful in working toward varied financial goals. For many people, however, it’s not a question of which kind of account to open, but where’s the best place to open both. When it comes time to consider savings account vs. checking accounts, the result may well be your realizing you need at least one of each.

Better Banking With SoFi Checking and Savings

An online banking account like SoFi Checking and Savings can be a great banking option. With SoFi Checking and Savings, account holders can spend, save, and earn all in one place. Sign up with direct deposit and earn a highly competitive 2.00% APY — and not pay any account fees. With a convenient mobile app, your account can be managed from wherever you are.

Start banking better with SoFi.

3 Great Benefits of Direct Deposit

1. It’s Faster
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.

2. It’s Like Clockwork
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.

3. It’s Secure
While checks can get lost in the mail – or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.


Photo credit: iStock/AleksandarNakic

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
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SoFi Securities LLC is an affiliate of SoFi Bank, N.A. 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.
SoFi members with direct deposit can earn up to 2.00% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 1.00% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. Rate of 2.00% APY is current as of 08/12/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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