Table of Contents
What is Checking Account?
A checking account is a type of bank account that allows you to deposit and withdraw money and make payments and transfers. Checking accounts are used for bill payments, money transfers, and purchase transactions. Additionally, they are the most typical kind of bank account.
Checking accounts offer a range of features, including overdraft protection, direct deposit, and online banking. Overdraft protection allows you to make purchases even if you don’t have enough funds in your account. In contrast, direct deposit allows you to deposit your paycheck directly into your checking account. Online banking allows you to access your account information, transfer funds, and pay bills from your computer or mobile device.
Checking accounts are subject to specific fees, such as maintenance and overdraft fees. However, many banks offer checking accounts with no monthly fees or minimum balance requirements. It is essential to read the fine print of any account you are considering to understand its fees and benefits.
Checking accounts are a convenient and secure way to manage your money. They offer convenience and flexibility and can help you stay on top of your finances. Before opening a checking account, it is essential to research different accounts to find one that is right for you.
What is Savings Account?
A savings account is a bank account that allows people to save money over time to earn interest on the balance. Commercial banks, credit unions, and other financial institutions offer this account. Savings accounts have higher interest rates than checking accounts and can help people grow their money more quickly.
Savings accounts also offer a secure way to store money and can provide a level of financial protection. If the bank or credit union fails, your money will be safe up to the insurance limit. Savings accounts have limited transaction capabilities. You can make a few withdrawals monthly without being charged fees, but you may be charged if you exceed the transaction limit.
Savings accounts don’t offer the same convenience as a checking account, such as the ability to write checks or use a debit card.
Savings accounts are an excellent way to accumulate money for the future. Many banks offer bonuses for opening a savings account, such as higher interest rates or waived fees. Making regular deposits is the key to maximizing the benefits of a savings account.
Difference Between Checking Account and Savings Account
- Checking accounts often have a monthly service fee and minimum balance requirement, while savings accounts do not.
- Checking accounts are for day-to-day spending, while savings accounts are for long-term savings goals.
- Checking accounts allow for the setting up of direct deposits and automatic payments, while savings accounts offer a different option.
- Checking accounts offer overdraft protection, while savings accounts do not.
- Checking accounts have lower minimum opening deposits, while savings accounts often have higher minimum opening deposits.
- Checking accounts are generally more accessible, while savings accounts are not intended for regular use.
Comparison Between Checking Account and Savings Account
|Parameters of comparison||Checking Account||Savings Account|
|Withdrawal Limits||Maximum 6 withdrawals monthly||Unlimited withdrawals monthly|
|Deposit Limits||Can do Unlimited deposits||Can do Unlimited deposits|
|Minimum balance||Can be low||Can be low|
|Debit Card||No access to debit card||Access to debit card|
|Interest rates||Usually higher than a savings account||Interest rates are quite low|