Checking vs Savings Accounts

Checking and savings accounts are account types that provide users different types of banking functionalities. As a result, they are usually used for different purposes. Therefore, most individuals end up owning both current and savings accounts in one or two banks.

Definitions

In basic terms, a checking account is a type of account that is usually used to pay for the day-to-day activities of individuals. A checking account owner mostly uses the account to pay for bills, purchase groceries, utilize the ATM and the POS, and all other daily spending activities. In most cases, an individual may likely receive their wages or salaries via a checking account. On the other hand, a savings account is a type of account that an individual uses to keep away money, which can be used for future use as a form of investment. In most cases, an individual that owns a savings account may likely keep some amount of money into the account from their paycheck.

The Difference Between Checking and Savings Accounts

Checking and Savings Accounts have several differences, which are highlighted below under different headings.

Primary Use

Checking accounts provide an individual a simple platform for spending money on day-to-day activities. These types of accounts usually come with high spending limits together with debit cards, and mobile banking platforms, which simplify spending. As a result, there is usually no limit on the number of withdrawals an individual can make on their account. However, the savings account is usually a type of account that is used to save money, which can be utilized later. It is a type of account that usually has a spending limit, unlike the checking account. In many banks, a monthly withdrawal limit is imposed on a savings account.

Interest

Banks do not typically pay interest into current accounts unless special arrangements are made. In most cases, an account owner may get charged for a certain transaction. As a result, checking accounts are not suitable for saving money. Savings accounts are usually credited with monthly interests depending on the amount of money saved and the withdrawal limit. Therefore, a savings account owner can keep their money in such an account with the hope of getting returns for their investment.

Add-ons

Checking accounts usually have all types of add-ons connected to the account to simplify and encourage spending. Consequently, debit and credit cards, mobile banking platforms, and many more add-ons are easily activated on a checking account so that the user can have ease while spending money. Many banks limit savings accounts to only a few add-ons to discourage spending. A savings account owner is more likely to get only a few add-ons on their account to discourage spending. Minimum Balance Although the minimum balance for both a checking and a savings account varies from bank to bank, a checking account can have a zero balance. In some cases, an account owner is allowed an overdraft if they are deemed creditworthy. Savings accounts usually have a minimum balance that cannot be exceeded. The amount, however, varies from bank to bank.

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