Difference between Checking Account and Savings Account
|A Checking Account is a transactional deposit service which is provided by financial institutions. It allows the withdrawal and deposits of money.||As the name signifies, Savings accounts are meant to help customers save their money and hence the money stored in a Savings account is not meant to be used on daily basis.|
|The interest rate in a Checking account is either zero or nominal.||Interest rate in a Savings account is higher than that of the Checking account. Yet, the amount of interest varies from bank to bank.The Government intends people to put more money in Savings account so that banks can borrow that amount for funding loans. Hence, the interest rate is higher.|
|Use of debit cards and checks is allowed in this type of account. It is intended for daily money transactions.||Facility for check writing is usually not available in Savings account. Large sum of money should be let into savings account as the money is intended to stay in the account and not to be withdrawn every day.|
|Being a daily purpose account, there is no limit of the number of withdrawals that can be done in a given time duration.||There is a limited number of withdrawals in Savings account. The limit is usually 3-6 withdrawals in a month.|
|In Checking accounts, banks require account holders to maintain a minimum account balance. There can also be a minimum number of transactions to be done each month. If these conditions are not met, bank may impose maintenance fees.||Savings accounts are mostly free of any fee provided the account holders do not exceed the limit of withdrawals. Usually there is no minimum balance to be maintained. But some banks like Bank of America impose a minimum balance to be maintained or a minimum number of money transfers to be made into account failing which a maintenance fees is charged.|
|Online transactions can be made using a Checking account. Billers can be added using online banking for paying mobile/electric or water bills which are usually recurring in nature. Other one-time payments can also be made.||No such privilege is provided to Savings account holders. Though money can be transferred from a Savings account to a Checking account but no online payments can be done using a Savings account.|
|Usually a debit card is provided with Checking account so as to facilitate money withdrawal from the ATM and paying for items. Only the available money in the account is allowed to be spent using a debit card.||Since Savings account do not come with debit card, withdrawals are done using telephonic calls, done by visiting the bank or transferred to a Checking account connected to that Savings account.|
|Other features like Overdraft are also there in a Checking account. Although, banks charge an overdraft protection fees so as to avoid the charges imposed by overdraft.||No such facility is there in a Savings account. Money can only be internally transferred online to a Checking account.|
|Some types of Checking account are :· Free Checking – In these type of accounts, no fee is charged unless the account holder overdrafts. Hence, these are the most popular.· Second-Chance Checking – If you open an account, the bank checks whether you have any history of account abuse. The Second-Chance Checking account can be opened even if your name is displayed in such list.
· Regular Checking- These impose restriction on balance and monthly fee is also charged.
· High Yield Checking – If you keep large balances in these accounts, the interest paid is higher than regular checking account.
|Savings account can be of the following types:· Bank Savings Account – This is a basic account requiring a minimum balance of $300-500.· Credit Union Savings Account – They offer membership share. $25 is required to be kept in the account.|