You already told me what a checking account is and what a saving account is. But what is the difference?
Well, what kind of difference do you want to learn about?
How do you go about taking money out of the checking or savings account using an ATM, or moving money from the account to another account?
If it’s a checking account, you can move the money freely – which means you don’t have any restrictions. But with a savings account, you might have a restriction on the number of time it can be done within a month.
But both checking & savings accounts have debit cards for ATM withdrawals, which is taking money out of an ATM.
Well, is there a difference between the interest earned from each of these?
Yes, there is. A checking account usually pays no interest, but a savings account pays some interest. Currently, 0.1% – 1.5% per year depending on the bank.
Well, that is really low interest! Anyway, what should checking and savings accounts be used for? Like, are their uses different?
Yes, their uses are different. Checking accounts should be used for day to day expenses, while savings account should be used to save for a short to medium term goals. And, you can also use it for an emergency fund.
Is there a restriction on how many checking or savings accounts that I can have?
No, you can have any number of checking accounts and savings accounts.
Yay! But is there a difference in the fees that a bank charges us for a checking and savings accounts?
Yes, there is a difference. In checking accounts, you usually have to pay a $10-$15 monthly fee. But for savings accounts, it’s only a $5-$10 monthly fee.
This fee is waived if a minimum balance is maintained, which means if a certain amount of money is kept in the savings or checking account at any given time.
But how do I even choose a checking or savings account? Like, are some better than others?
Yes, it is better if you choose an FDIC insured bank so that your money is safely kept. And, for savings account, you should usually look for a high interest rate.
You should also look for a low or no monthly fees, with both savings and checking accounts.