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Savings and Checking Accounts

Savings and checking account explained. Find out more.

What will be discussed:


What is a Savings Account?

What is a Checking Account?

Main features of a Savings Accounts

Main features of a Checking Account


What is a Savings Account?

A Savings Account is basically a deposit account held at a bank or other financial institution that provides principal security and a modest interest rate. Depending on the specific type of savings account, the account holder may not be able to write checks from the account (without incurring extra fees or expenses) and the account is likely to have a limited number of free transfers/transactions.

Savings account funds are considered one of the most liquid investments outside of demand accounts and cash. In contrast to savings accounts, checking accounts allow you to write checks and use electronic debit to access your funds inside the account. Generally you deposit on savings accounts money that you don't intend to use for daily expenses. To open a savings account, simply go down to your local bank with proper identification and ask to open an account.

What is a Checking Account?

A Checking Account is a transactional deposit account held at a financial institution that allows for withdrawals and deposits. Money held in a checking account is very liquid, and can be withdrawn using checks, automated cash machines and electronic debits, among other methods.

A checking account differs from other bank accounts in that it often allows for numerous withdrawals and unlimited deposits, whereas savings accounts sometimes limit both. Checking accounts can include business accounts, student accounts and joint accounts along with many other types of accounts which offer similar features.

So why, might you ask are Savings Account and Checking Account in the same category? Simply because these accounts are the most liquid, meaning the capacity to be easily converted to cash. As mentioned above, these Savings and Checking Accounts can be spent using counter withdrawal, checks, ATM or Debit card, to name a few.

Although Savings Accounts and Checking Accounts have similarities, it’s also good to understand the difference between the two. Knowing their similarities and difference can help you determine the best account for you and your money needs. 

Historically savings and checking accounts were quite different. Savings accounts were considered “deposit” accounts and earned interest that was paid daily or monthly. Checking accounts were used to pay bills or make purchases.

Today, savings and checking accounts are similar in many respects. The main differences are that savings accounts limit the number of monthly transactions and always earn interest.

This table is a summary of the standards conditions that apply to Savings and Checking Accounts:


Savings Account

Checking Account

Purpose of the account

Accumulate modestly  but safely earnings

Manage your money daily

Medium of payment

Limited (debit card or counter withdrawal)

Diverse (checks, debit card, automated cash machines, electronic debits, or counter withdrawal)

Number of transactions

Limited for free

Unlimited for free


Low saving rate,  different depending on the bank

No earnings


Here’s a listing of the typical main features of a saving account:

  • Primary purpose is to save money (for emergency, for future purchases, or to invest).
  • Number of withdrawals per month is limited (6 or less).
  • Pays a higher interest rate than an interest-bearing checking account.
  • May require a minimum balance to avoid fees.
  • May charge fees for too many withdrawals.

The main features of a checking account include:

  • Primary purpose is to manage daily money transactions such as paying bills and making purchases.
  • Few or no restrictions on the number of withdrawals or checks per month (some checking accounts offer a limited number of “free” checks per month and then charge a fee if more checks are written).
  • May pay interest, with some accounts paying higher interest rates as your balance increases.
  • Usually charges a monthly maintenance fee (which may be waived under certain circumstances, such as maintaining a minimum daily or monthly balance, or if the account is linked to a savings account in the same institution). Check with your financial institution to learn if you can qualify for a “no fee” checking account. Many offer no fee accounts for students.


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