Financial management is the key to financial stability and success, as many people have experienced. This is why in many cases, people open a bank account where they can store their finances and manage them. When it comes to this, you have the option to choose between a checking and savings account. Although the two are the most common types of bank accounts today, each comes with its own features and uses and pros and cons.
In this article, we will share the differences between a checking and savings account so that you will be able to handle your finances better.
Checking account vs. savings account
Let’s first take a look at the differences between a checking account and a savings account. Take note of the following details:
Checking account: This type of bank account allows you to make withdrawals and deposits designed for frequent transactions. This account offers both a debit card and check-writing capabilities.
With a checking account, you can withdraw cash at a branch or ATM and make debit card purchases, checks, money orders, ACH transfers, and wire transfers. As for the deposit, you can do so via depositing cash through checks or money orders at a branch or ATM, as well as mobile check, deposit, automated clearing house (ACH) transfer, or wire transfer.
On a practical note, a checking account is beneficial for regular transactions, such as paying bills electronically or via check, making purchases or ATM withdrawals using a linked debit card, and transferring money to an account at a different bank electronically.
Savings account: This type of bank account is designed to help you save money, as the name suggests. This deposit account is designed for holding funds that aren’t meant for paying bills or covering spending.
The ultimate goal of opening a savings account is to: 1) grow your money (i.e., for an emergency fund), and 2) separate long-term money (i.e., for vacation, home purchase, or home improvement project). You can open a savings account from traditional banks, online banks, or credit unions.
But apart from its main purpose of depositing money, you can still perform financial transactions, such as transfers to other accounts and cash withdrawals.
Here at Good Neighbors Credit Union, we endeavor to provide you with the best possible tools and resources to help you manage your finances. Whether you’re looking to invest in a checking account or savings account, we’ve got you covered!
What option to choose
When it comes to a bank account, you may consider opening a checking or savings account. Of course, this boils down to your personal needs and personal preferences. As such, when deciding which option to choose, here are a few factors to consider:
- Fees associated with the account (maintenance fee)
- Minimum balance
- A bank account with an ATM card or a debit card
- Daily limits on ATM withdrawals and deposits
- Earned interest on the account
Apart from the features that these bank account types offer, you must always remember to assess your personal needs. First, ask yourself why you’re planning to open a checking or a savings account. Second, see what features of these accounts will benefit you in the long run. When you determine the answers to these questions, you’ll be able to make the right decision for opening a bank account!
At this point, we’ve covered the major differences between checking and savings accounts. To that end, be sure to consider all the valuable information discussed above. With all these in mind, you’ll be able to make the right decisions to help manage your finances in the long run!
We’re a go-to credit union in Buffalo, NY, providing local credit union banking services, credit card services, and loan applications. If you’re looking to apply for a checking account or savings account, get in touch with us today to see how we can help!