Did you know that a quarter of the population manages their financial transactions in cash without depending on bank accounts? Both a savings and a checking account can help you manage your finances better.
Here is a detailed comparison of savings vs. checking accounts that you should know about.
The use of accounts
Primarily, when it comes to savings vs. checking accounts, they serve two different purposes. Savings accounts are opened to help save money gradually while checking accounts are usually created to handle everyday financial transactions and are considered as spending accounts.
Withdrawal limits
When it comes to withdrawal limits, checking accounts have no limits. You can withdraw money as you please. Savings accounts may have a limit between 3 to 6 transactions a month, depending on your bank.
Maximum withdrawal
Between savings vs. checking accounts, both have certain maximum withdrawal limits based on the minimum balance you are required to maintain. You will have to check with your bank to know your minimum balance requirements. Most banks do not let you withdraw the total deposit at once.
Interest earned
If you are looking to earn interest on the money deposited, savings accounts are a better choice. The average national savings account interest rate in the country right now is 0.09% Annual Percentage Yield (APY). While some checking accounts do let you earn interest on your deposits, the money earned is not substantial, like in a savings account.
Withdrawing money
Between savings vs. checking accounts, it is easier to withdraw money from your checking account. You can transfer from the account online or use your ATM card for cash withdrawals. Usually, if you want to withdraw money from a savings account, you may have to transfer it to your checking account and then withdraw the amount. The process is slightly complicated.
Other features offered
Since everyone needs a checking account, the features offered by this account are extensive. You can make use of overdraft features, online transactions, foreign transactions, automated bill payment features, and more with checking accounts. Savings accounts are more for safeguarding your cash and hence, do not have a lot of features. You may be able to access it online and transfer money from the savings to your checking account. However, the features stop there.
It is not practical to choose between both these accounts. Both accounts have their advantages, and you will benefit from owning both these. Use your checking account for everyday transactions, and do not forget to save money in your savings account for rainy days. Both accounts will keep your hard-earned money safe.