Checking vs Savings Account: Key Differences

A checking account is where you keep your money for day-to-day spending, such as paying bills or buying groceries. Checking accounts can also be used to:

• Receive or send cash through a payment platform
• Deposit your paychecks
• Set up automatic payments for your bills
• Write and send check

Checking accounts usually come with a debit card associated with the account to use for daily spending. This means that when you swipe your card to make a purchase or use an ATM, the funds come from your checking account.

Checking account pros

Checking accounts have lots of advantages, like allowing you to make frequent deposits and withdrawals (money in a checking account is very liquid). This also comes in handy when paying regular bills.

Some other advantages of checking accounts include: 

• No limits on how many withdrawals you can make 
• Easy access for everyday spending
• Ideal for paying monthly bills
• Easy to receive direct deposits
• Simple expense tracking

Checking account cons

Unlike a savings account, many checking accounts don’t pay interest. For this reason, a checking account isn’t the best place to store your long-term savings if you want to maximize the amount you can earn.

Some checking accounts do pay interest, but the APY (annual percentage yield) tends to be very small. As of September 2025, the national average APY on checking accounts was just 0.07%.¹ To put this number into perspective, if you kept one thousand dollars in a checking account with a 0.07% APY, you’d only earn $0.70 of interest in a year.

Not only does your money not grow efficiently, using a checking account to store your long-term savings can also make it hard to distinguish between what money you want to save and what money you’re comfortable spending.

In summary, the cons of checking accounts are:

• Typically lower interest rates than savings accounts
• Not ideal for long-term savings

A savings account is where you keep money for future goals. Your funds are less liquid, and you’ll typically leave them untouched for longer periods of time. You can also use this account as a rainy day or emergency fund.

There are different types of savings accounts, including traditional savings and high-yield savings accounts (HYSA). An HYSA functions similarly to a traditional savings account but offers a higher interest rate, helping you grow your savings faster.

Savings account pros

Savings accounts with FDIC insurance provide a safe place to save your money.² They help you stay accountable by storing the money you’re not willing to spend separately. This is especially useful when saving up for a big purchase like a car, home, or vacation.

Plus, you can earn some interest with savings accounts (more than you would in an interest-earning checking account). The average interest rate on a savings account is 0.40%,¹ but some high-yield savings accounts offer APYs of 4.0% or more. 

The main advantages of a savings account are: 

• Offers a higher interest rate than a checking account
• Allows you to build long-term savings
• May come with extra benefits like automatic savings
• Stores money separately so you don’t spend it

Savings account cons

While many checking accounts offer unlimited transactions, savings accounts may limit your withdrawals to six per month. In April 2020, the Federal Reserve announced it would no longer require financial institutions to enforce the limit of six monthly withdrawals.3 However, some banks still impose this restriction. 

You also typically won’t earn as much in interest as you would using other investment or savings tools, such as a 401(k), IRA, certificate of deposit (CD), or money market account.

In summary, the main cons of a savings account are:

• Monthly withdrawal limits may apply
• Investment accounts, money market accounts, and CDs usually offer higher interest rates
• Not ideal for everyday spending

While both checking and savings accounts are bank accounts where you can put your money, they serve their own purposes. Here’s a look at the main differences between checking and savings accounts:

When determining the best accounts for you, two main factors to consider are bank fees and convenience. This helps ensure you’re keeping as much of your hard-earned money as possible while having access to your funds without extra hassle.

1. Bank fees

Banks and other financial companies make their money in several ways. One of these ways is by charging fees.

Common fees for checking accounts include:

• ATM fees when using an ATM, typically one that’s out-of-network.
• Overdraft fees when you spend more than what’s available in your account.
• Monthly fees for not maintaining a minimum balance or making a certain number of transactions.
• Foreign transaction fees when you use your debit card outside of your country.
• Card replacement fees for asking for a replacement debit card

Common fees for savings accounts include:

• Monthly maintenance fees to maintain your account each month.
• Overdraft fees if you withdraw more money than what’s in your savings.
• Minimum balance fees for not maintaining a minimum balance requirement

Note that some banks don’t charge monthly maintenance fees or will waive them if you maintain a certain balance in your account or use direct deposit.⁴ 

2. Convenience

The next factor to consider when choosing spending and savings accounts is convenience.

• ATM access: For starters, check the bank’s network of ATMs and see where you can withdraw money from a fee-free ATM. Some banks will also reimburse you for out-of-network ATM fees up to a certain amount each month. 
• Customer service: Do some poking around to see how their customer service fares. Is it easy to get a hold of someone? Are they helpful once you get someone on the line or via chat? What do customer reviews say on a site like TrustPilot or the Better Business Bureau? 
• Features: Automatic savings features, a great mobile banking app, and the ability to send money to family and friends – these are all great features you should benefit from. Make sure you’re not missing out.

Whether opening an account online or at a brick-and-mortar location, you must supply personal information such as your name, address, and date of birth. You may also need to provide an ID number, like your Social Security Number.

Some accounts require you to deposit a certain amount of funds, or a minimum deposit, to activate your account. Other accounts allow you to fund your account after you’ve opened it.

You can fund your account in several ways, including depositing cash, using a pre-paid card, or sending an e-transfer from another account.

Checking and savings accounts serve different but complementary purposes. Use checking for your day-to-day life – paying bills, making purchases, and accessing cash – and savings to build funds for future goals and emergencies. Combining both helps you manage your spending while steadily growing what you set aside.

To explore checking options in more detail, see our guide to types of checking accounts.