Over 95% of Americans have a checking account, a savings account, or both, according to a report from the FDIC (Federal Deposit Insurance Corporation). Understanding the differences between these two accounts can help you better manage and grow your money.
What is a Checking Account, and Why Use One?
A checking account is one of the most popular deposit accounts and is designed for quick and easy access to manage your day-to-day spending and transactions. Money flows in and out quickly and seamlessly with direct deposits and mobile payment applications, like Zelle, connected to your checking account.
Paper checks and cash are almost a thing of the past, with debit card transactions, Zelle, and auto bill pay transactions pulling money directly out of your checking account with just a swipe on your phone.
Standard checking accounts offer convenience, but the tradeoff is low to no interest.
Choose from TDECU’s checking accounts designed to work for you. We have you covered with no monthly minimum balance requirements and surcharge-free ATM withdrawals.
What is a Savings Account, and Why Use One?
A savings account is a deposit account designed to help you save and grow your money over time. You can earn interest on your balance, and depending on the type of savings account, those earnings can be significant. Use your savings account to build an emergency fund, a car, or a house fund to increase your financial independence.
Different types of savings accounts can help you reach your various savings goals. Traditional savings accounts help build rainy-day funds. A higher-interest money market account, high-yield checking account, or a certificate of deposit can hold and grow your money to meet your future financial goals.
Savings accounts often have higher interest rates but may have minimum balance requirements and withdrawal limits.
Main Differences Between Checking and Savings Accounts
Understand the key differences between these two accounts to help you choose the best option for your financial needs.
- Checking accounts provide easy access for day-to-day use.
- Savings accounts are for saving money for emergencies and growth for the long term.
- Savings accounts offer higher interest rates than checking accounts.
- Checking accounts offer nearly unlimited withdrawals, but savings typically have a maximum.
- Checking accounts may be more vulnerable than savings accounts to fraud due to the higher number and broader array of transactions.
Both types of accounts are federally insured for up to $250,000 per account holder, bank, and account category by the National Credit Union Administration (NCUA).
Use Your Accounts Together
Let your accounts work together to manage your personal finances better.
- Automatically transfer excess funds from your paycheck and other deposits from checking to savings to grow your savings consistently.
- Use your savings account as overdraft protection on your checking account to minimize fees.
- Tap into your savings account for unexpected expenses, such as a car or home repairs, to avoid overdrawing your checking account and being hit with overdraft fees.
Take advantage of your financial institution’s mobile banking app to easily manage and monitor your account balances.
Which Accounts are Right for You?
Shop around for the best bank or credit union for your banking needs. Research fees, minimum deposits, annual percentage yields, withdrawal limits, and perks to find an account right for you.
TDECU helps you get the most from your accounts with competitive interest rates on our interest-bearing checking and savings accounts, low to no monthly fees, and access to over 55,000 surcharge-free ATMs worldwide.