Checking vs. Savings Accounts
Bank accounts come in lots of flavors, but the most common are savings swirl and cherry checking. Or, as most people like to call them, savings and checking.
Basically, a savings account is where you put money that you don't need immediate access to; a checking account is where you put the money you might need to get your hands on pretty soon. Most ATMs will allow you to deposit and withdraw money.
Let's break it down:
| SAVINGS ACCOUNTS | CHECKING ACCOUNTS |
| Used mostly to save money; you probably won't need to access it too much | Used to pay bills, write checks, and buy stuff |
| Earns some interest | Earns some or no interest (and certainly less than a savings account) |
| Possible monthly fees | Possible monthly fees |
| You can't write checks using the money in it | You can write checks using the money in it |
| There is sometimes a minimum balance or deposit | There is sometimes a minimum balance (but it will be much lower than a savings account); there is usually no minimum deposit |
| Some savings accounts allow you to withdraw money only a few times a month or charge extra for additional withdrawals | You can withdraw as much money as you want, whenever you want |
| Very few extra features (in fact, you might have to transfer your money from your savings account to your checking account to even get at your cash) | Lots of features (including automatic bill pay and wire transfers) |
If you need to, uh, buy stuff, a checking account is probably your best bet. And, honestly, interest rates are so low on checking and savings accounts that unless you have a boatload of cash in there—in which case, you should probably be investing anyway—the interest rates won't make that much of a difference.
Whatever you decide, remember that there are plenty of types of both checking and savings accounts: some have higher interest rates, higher fees, higher minimum balances…things you need to keep your eye out for. Here are a few questions to ask yourself before you make the call:
- Will you be using your account just to save money, or will you need to easily access the cash?
- Do you want to have a debit card that you can use at ATMs and in stores?
- What other features do you want with your account?
- How much money will you keep in your account?
- Are you okay doing all of your banking online? (eSavings accounts have some perks, but don't have actual locations—that freaks out some people.)