Savings and checking are two different types of bank accounts. A checking account is a kind that is created for regular transactions. On the other hand, a savings account is not meant for regular use and is intended for the accumulated funds to stay and further be saved in the account. These accumulated funds will further earn interest over time. There are more than fundamental differences between these two accounts that should be considered when opening either of the accounts. Let’s find out more about savings vs. checking accounts.

Interest Rates
Based on the choice of the bank, in most of the cases, checking banks only earn little to no interest. On the other hand, savings bank accounts are known to always accrue interest. The exact interest rate on a savings bank account will depend upon the choice of the bank, the kind of savings account that’s opted, and the amount deposited. However, in a savings vs. checking accounts secenario, the interest rate on a savings bank account is usually higher than that of a checking account. The highest rate of interest on savings accounts in the country, as of May 2016, was 1%.

Account Charges
In case of checking accounts, the account holders are required to meet certain criteria. Not meeting these requirements would lead to a penalty or charge on the account. Some examples of these criteria could be setting up a direct deposit of paychecks into the account, maintaining a minimum balance in a particular period, making a minimum number of transactions from the account every month, etc. In addition to these, a checking account may witness charges such as an overdraft charge, ATM usage fees, and overdraft protection charges. On the other hand, savings accounts are mostly free of such charges unless the owners exceed the withdrawal limit. In a few cases, like in that of Bank of America, savings account holders would need to maintain a minimum balance on a daily basis. Some other accounts also have the requirement of a certain number of transactions every month into the account to avoid account maintenance fees.

Debit Cards and Withdrawal
Account holders of a checking account usually receive a debit card when opening the account. This card can be used to make withdrawals at ATMs and payments at various stores where they’re accepted. Debit cards are, however, not provided with a savings bank account. If a savings account holder would require to make any withdrawals, the required funds would need to be transferred to a checking account first. This can be done online, requested over the call, or be done in person in the bank. This is a plus point for checking accounts vs. savings.

Recurring and One-time Payments
A checking bank account comes with the facilities of making payments through various modes such as the online mode. In addition to that, the account holder can set up automatic payments for recurring bills such as rent, electric, and water bills. This account can also be used to make one-time payments. However, this is not a facility that is available for savings bank accounts. Money can only be transferred from a savings bank account into a checking account.