The debate of choosing a checking vs savings account can be a contentious one. The main questions are whether to choose a checking account or a savings account. Of course, the answer depends on your needs, preferences, and goals. If you want to know more about these accounts and how they compare with each other before signing up for one, read on!
Checking vs savings
A checking account is used to pay bills and make withdrawals, while a savings account is used to save money and earn interest.
A checking account gives you access to your funds anytime you need them, but they don't offer any interest on the balance in your account. A savings account makes it easy to stash away cash without worrying about losing it before you can use it later on--but there's no guarantee that your money will grow much faster than inflation (which means that prices will go up).
According to Lantern by Sofi experts, "Checking accounts are made for day-to-day spending, while savings accounts are made for growing and saving your cash."
Pros of Checking vs Savings Accounts
A checking account is a place to keep your money. You can use it for online purchases, overdraft protection and bill pay. You can also write checks or deposit cash into the account.
Checking accounts often have no monthly fees, and many banks offer free checking accounts with no minimum balance requirement or maintenance fees for customers who meet specific criteria (e.g., direct deposit or automatic payments).
Cons of Checking vs. Savings Accounts
Cons of Checking vs. Savings Accounts
- You can't earn interest on a checking account. If you're looking for a place to stash your cash and make some money, it's better to stick with savings.
- Your bank may be able to take your money any time they want (for example, if they think you've done something wrong). With a savings account, there are rules about when banks can take those funds away from customers--but those regulations don't apply in the case of checking accounts.
- It's harder to access the money in your checking account because it's tied up in other commitments such as automatic bill payments and direct deposits from employers or government agencies like Social Security payments or veterans' benefits.
How to choose between them
When it comes to choosing between checking and savings accounts, you should consider the following:
- Interest rates. If you want to earn some extra money, look for high-interest rates on your checking account. However, if you're looking for a place to store your money safely and securely, then the interest rate won't matter as much.
- Minimum balance requirements. If you have a lot of cash sitting around in your checking account but aren't earning any interest on it because of low balances or no-fee options elsewhere (see below), then consider switching over so that at least some of those funds can start earning interest instead of just sitting there doing nothing--or worse yet getting eaten up by monthly service charges!
Hopefully, this guide has helped you understand the difference between checking and savings accounts. If you still need to decide which one is right for you, consider what type of account(s) your bank offers and make sure they meet your needs before making any decisions.
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