Difference Between Checking and Savings Account

The Modern Banking system came into existence in the year 1587 in Venice. The traders established it to facilitate the deposit of money through their trade businesses.


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It is, from then on, named for safeguarding, transferring, and lending money. The banks later categorized the accounts into two types; checking and savings.

People choose from the two depending on their requirements. Indeed, financial experts also advise the same to customers to choose an account based on their needs.

Checking and savings account functions in the same fashion internally; there are many differences between the two in terms of functionality.

Key Takeaways

  1. Checking accounts enable frequent transactions and easy access, while savings accounts encourage long-term deposits with limited transactions.
  2. Savings accounts usually offer higher interest rates than checking accounts, promoting saving and investment.
  3. Checking accounts may come with additional services like bill pay, debit cards, and overdraft protection, while savings accounts focus on accumulating interest.

Checking vs Savings Account

Checking accounts are intended for everyday transactions and are typically used for spending and paying bills. They often have lower fees and minimum balance requirements and may offer features such as overdraft protection and debit cards. Savings accounts are designed to help people save money and earn interest on their deposits. They typically have higher interest rates and stricter withdrawal limits but lower fees and fewer features.

Checking vs Savings Account

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Comparison Table

Parameter of ComparisonChecking AccountSavings Account
Meaning/DefinitionA checking account is a category of bank deposit account which is used for day-to-day money transactions.A savings account is a category of bank deposits used for long-term savings.
Money Withdrawal restrictionsThe checking account has no restrictions as such.The savings account has withdrawal limits. It may differ from bank to bank.
Interest CriterionA checking account does not earn any interest; if any bank offers interest, it is significantly less.A savings account is meant for interest-earning too. The longer the money is in the savings bank account, the more interest the customer earns.
Access to the account for the moneyChecking accounts can be accessed anytime.The money has to be transferred to the checking account for any access.
Other benefits and featuresA checking account has many added features like debit card access, online transfer of funds to external accounts, and Automatic bill pay.The savings account has no facilities or benefits except for transferring funds to the connected checking account.


What is Checking Account?

A checking account is a category of bank deposits where the money is used for day-to-day transactions.

A checking account generally does not earn any interest; even if any bank pays interest, it will be nominal and considered less.

The checking account comes up with many additional benefits and facilities. It comes with a debit card that can be used to access money to withdraw or for any card-based purchases in-store or online.

Banks do not impose any restrictions on withdrawals for checking bank accounts. Banks, at the same time, require the checking bank account holders to meet specific criteria. If not, a fee is levied.

Checking account holders are expected to maintain a certain money balance in the account. In addition to it, there must be a minimum transaction to have happened from the account too.

The checking account comes with an online transaction option for external bank accounts. An automatic bill that pays for utilities can be quickly done using a checking account.

A financial expert advises customers to check if the money in the checking account is under insurance guidelines before opening an account in the bank.

Checking accounts are generally transactional accounts that can be used for expenditures.

checking account

What is Savings Account?

A savings account is a category of bank deposit aimed at saving money for the long term. A savings account accrues interest; the longer the money is in the savings account, the more interest is earned.

A savings account is considered to be an investment for the future. In a way, the customer offers the bank access to the money for their lending purposes by paying the customer interest for the amount deposited.

It is widely observed that savings account is no-fee account.

No unwanted charges or fees are charged as long as the money is in the bank account. However, banks charge account maintenance fees, and few banks also expect a minimum balance to be maintained in the account.

A savings account does not come up with facilities like a debit card. The only online transaction that can be done is to the checking account connected to the savings.

The design of the savings account is in such a way that it is harder to spend money.

If at all to be spent, the money has to be transferred to the checking account and then spent; this must also fall under the limit of the online transaction to the checking account.

A savings account may not yield higher rewards in a shorter duration. Financial experts advise holding a good amount of money in a savings account for a more extended period to earn good rewards in the form of interest.

savings account

Main Differences Between Checking and Savings Accounts

  1. A checking account is where the money is deposited for day-to-day transactions, while a savings account is meant for long-term savings.
  2. Checking accounts may not earn any interest. If at all earned, it will be very minimal. A savings account is a long-term investment; it earns interest, and the best part is that the longer the money in a savings account, the greater the interest.
  3. Checking accounts does not have any limits on the withdrawal of money, whereas there are strict restrictions on the withdrawal of money from a savings account.
  4. Checking accounts has many benefits, like debit cards, online transactions to external bank accounts, and overdrafts. A savings account does not come up with any of these facilities.
Difference Between Checking and Savings Account
  1. https://www.bostonfed.org/-/media/Documents/neer/neer299a.pdf
  2. https://fraser.stlouisfed.org/files/docs/publications/frbrichreview/rev_frbrich197811.pdf
  3. https://journals.sagepub.com/doi/abs/10.1177/0891242402239199
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