HomeBankingChecking Vs. Savings Accounts: Which Should You Open?

Checking Vs. Savings Accounts: Which Should You Open?

Checking accounts are meant for everyday spending (think paying rent and buying groceries), while savings accounts are meant for stashing away money for the future (think vacations and unexpected emergencies).

I interviewed seven financial experts to help you understand the differences between checking vs. savings accounts.

Read on as I discuss the tips, tricks, pros, cons, and features you should look for when shopping around for an account.

Checking and savings accounts overview

  Checking accounts Savings accounts
Key features • Comes with a debit card
• Can make unlimited withdrawals and deposits at any time
• May come with a checkbook
• Earns little-to-no interest
• FDIC- or NCUA-insured
• Earns a higher interest rate than checking accounts
• Can’t make more than six withdrawals a month
• FDIC- or NCUA-insured
Best for • Everyday spending
• Those who need a debit card or checks to pay bills and make purchases
• Saving money
• Those who want to earn more interest on money they don’t need right away
Best account Discover Cashback Debit Ally Online Savings

What is a checking account?

So a lot of this you will know – but let’s start at the top anyhow.

A checking account is a bank account designed for everyday spending. It typically comes with a debit card and checks so you can buy things without having to carry around cash.

Taylor Jessee, CPA, CFP®, and Director of Financial Planning at Taylor Hoffman Wealth Management says:

“Checking accounts should be used for everyday banking purposes, like paying bills, ATM withdrawals, basically to cover your living expenses…There is no limit on the number of withdrawals you’re allowed per month.”

But this flexibility comes at a cost. Most checking accounts don’t earn any interest at all. And if they do, it may only be 0.03% on your total balance. (That’s three pennies a year for every $100 in the account… Peanuts!)

Pros and cons of checking accounts

Pro: you get a debit card

Your checking account is meant to be used every day, so your bank hooks you up with all the tools you need to access your money. You get a debit card, a checkbook, and snazzy in-app features that let you deposit checks, transfer money, and send peer-to-peer payments to friends.

Adam Moelis, Co-Founder and CEO of Yotta, breaks it down:

“A checking account needs to have more capabilities than a savings account since it’s your day-to-day transaction account. Find one that has everything you need to do day-to-day banking (wires, ACH transfers, debit cards, mobile check deposits, and so on).”

Pro: you’ll get unlimited access to your money

Banks may put limits in place that say you can’t withdraw more than $500 from an ATM each day, but this is to help prevent fraud. Other than that, you have free reign to make as many deposits and withdrawals as you’d like as long as you don’t overdraft on your account. This is different from savings accounts, which typically limit you to six withdrawals a month.

Con: you may have to face high fees

All this free reign over your checking account comes at a cost. Many banks (especially the traditional ones) will charge you a monthly fee if you don’t meet certain requirements.

There are a lot of really great no-fee checking accounts out there, so don’t settle for ones that will drain your account dry with fees. Shop around first.

Con: you’ll get little-to-no interest

For the most part, you won’t earn any interest on the money in your checking account. And if you do, it’ll be peanuts. 

Jessee sets up the trade-off like this:

“The trade-off is, checking accounts give you more flexibility to move money without constraints, but savings accounts give you higher interest rates.”

What is a savings account?

A savings account is designed for stashing away excess money you don’t need right away. Ideally, you want to use it to save for rainy days and any big purchases you have coming up — like a new car, that trip to Thailand, or that $2,000 Peloton bike you’ve been eyeing. The sky’s the limit!

Moelis gives this advice:

“Since savings accounts pay a higher yield, you might as well put all the cash you’re not planning to use in the immediate future there so you get more money paid in interest to you.”

Pros and cons of savings accounts

Pro: you’ll earn more interest

Kenny Senour, Certified Financial Planner™ (CFP®) with Millennial Wealth Management talks about the importance of interest:

“Savings accounts typically earn higher interest on deposits, which is an important consideration when looking through different options.”

But not all savings accounts are created equal. You’ll want to look for a high-yield savings account if you want to earn the most interest.

Ami Shah, CFP®, Harvard MBA, and CEO of Steward says:

“Given how low interest rates are, standard savings accounts are pretty redundant with checking accounts today, but high-yield savings accounts still offer a differentiated benefit with higher interest rates…[Online banks] are able to offer these higher rates because they don’t have to support a large brick-and-mortar footprint — think Amazon vs. Macy’s of the banking world.”

Pro: you typically won’t pay any fees

Most savings accounts are free to open and maintain. Because you’re not making as many deposits and withdrawals as you do with a regular checking account, it’s less expensive for a bank to maintain. Therefore, they can pass these savings onto you in the form of more interest and fewer fees.

Pro: out of sight, out of mind

When you see the money sitting in your checking account, you may be tempted to spend it in the heat of the moment. But when it’s locked away in an entirely separate account, it’s easier to leave it alone.

Shah comments:

“There’s a psychological benefit of separating your savings from your day-to-day checking…A separate savings account makes it harder to accidentally dip into your savings without good reason.”

Con: transaction limits

The biggest drawback of savings accounts is that you can’t make more than six withdrawals a month. If you do, your bank may charge you a fee or close your account (if you do so repeatedly).

This withdrawal limit is due to Regulation D — a federal rule put in place to help ensure banks keep enough cash reserves on hand.

Con: you’ll have fewer ways to access your money

Checking accounts come with debit cards and checkbooks, but savings accounts usually don’t come with either of these perks. A few banks may give you an ATM card to withdraw cash, but even this isn’t standard practice.

For most savings accounts — especially online-only ones — the only way to access your money is to transfer it to another bank account first.

Which should you choose?

Checking and savings accounts aren’t an either/or situation. You need both:

Hillary Seiler, Certified Financial Educator® and President of Financial Footwork shares:

“Your checking account is for the daily financial things, your savings account is separate, keeping any extra money in a safe, out-of-the-way place. Most people benefit from having both.” 

And don’t feel like you have to wait until you’re rolling in the dough to open a savings account. Even small transfers add up over time. Seiler advises:

“As a financial educator, I encourage people to save every month, no matter the dollar figure! If you can transfer $5 per month into your savings account, it encourages you to establish a savings habit, AND you have money set aside when life happens.”

Carter Seuthe, CEO of Credit Summit has a similar recommendation:

“You should open both accounts as soon as you start making an income. Then, aim to save at least 20% from your paycheck.”

Features of the best checking and savings accounts

Hands down, every checking or savings account you consider should be FDIC-insured (if it’s at a bank) or NCUA-insured (if it’s at a credit union). This ensures you’d get all your money back, up to $250,000, if the institution were to go belly-up for some reason.

Besides this, though, the financial team I interviewed had a lot to say about what to look for in the best checking and savings accounts:

“The best checking and savings accounts are the ones you don’t have to pay for,” says Seuthe. “Plenty of banks offer free checking and savings accounts now, so don’t use one that charges.”

Valerie Moses, Sr. Relationship Manager at Florida-based credit union, Addition Financial, agrees:

“When opening a checking or savings account, find out what fees are associated with the account and how those fees can be avoided. In addition, find out where the financial institution’s branches and ATMs are located, and whether those locations are convenient to you.” 

Best checking accounts

To help you find an account fast, I rounded up a list of the best free checking accounts:

Discover Cashback Debit

The Discover Cashback Debit account has it all — 1% cashback on up to $3,000 in debit card purchases each month, no minimum balance to open, no monthly fees, and access to over 60,000 free ATMs in the U.S.

If you’re looking for a rewards checking account that puts cashback in your pocket, this one is as good as it gets.

Open a Discover Cashback Debit account today or read our full review.

Chime Spending Account

ChimeChecking Vs. Savings Accounts: Which One Is Better? - Chime is a Gen Z’s checking account dream if I’ve ever seen one. It packs a punch with early direct deposits, no hidden fees, and up to $200 in free overdraft protection for those days when you spend a little more than you should.

Plus, you can earn 0.50% on your savings when you open Chime’s savings account and set aside money in it using the Automatic Savings tool.

Open a Chime Spending Account today or read our full review.

Chime Disclosure – Chime is a financial technology company, not a bank. Banking services provided by, and debit card issued by, The Bancorp Bank or Stride Bank, N.A.; Members FDIC.


Checking Vs. Savings Accounts: Which One Is Better? - AspirationLooking for a socially conscious checking account focused on doing good? Look no further than Aspiration. The bank never uses your money to fund fossil fuel projects and will even plant trees with your spare change if you turn on debit card round-ups.

But the perks don’t stop there. You’ll also earn 3%-10% cash back when you shop with socially conscious companies like Toms, Warby Parker, and more.

Open an Aspiration Spend & Save account today or read our full review.


Checking Vs. Savings Accounts: Which One Is Better? - OnJunoIf you’re looking for an online checking account that rivals any savings account, OnJuno is your answer. You’ll earn a Bonus Rate of 1.20%.

You also get 5% cash back on five brands of your choice. (Seriously, they let you choose!) Plus, free cash withdrawals at over 85,000 ATMs nationwide. It’s an excellent option for all my tech-forward peeps out there who want some digital banking perks.

Open an OnJuno account today or read our full review.

Ally Interest Checking

Checking Vs. Savings Accounts: Which One Is Better? - AllyIf there’s one thing you should know about me, it’s that I’m a huge fan of Ally Bank. I love their Interest Checking account because you earn 0.10% interest on the first $15,000 in your account and 0.25% on anything over that.

You can open an account with as little as $0 and there are no fees for monthly maintenance, overdrafts, ACH transfers, and more.

Open an Ally Interest Checking account today or read our full review.

Best savings accounts

Discover Online Savings

Checking Vs. Savings Accounts: Which One Is Better? - DiscoverDiscover may be known for its credit cards, but did you know it also has an insanely sweet set of bank accounts? The Discover Online Savings account is no exception.

The thing I love most about this account is that it’s essentially fee-free and has no minimum balance requirements. You’ll also earn 0.40% interest on every penny in the account.

Open a Discover Online Savings account today or read our full review.

CIT Savings Builder

Checking Vs. Savings Accounts: Which One Is Better? - CIT BankThe CIT Bank Savings Builder account is designed to help you build your savings. (It’s right there in the name!)

You earn 0.40% APY when you deposit at least $100 into the account each month or maintain a $25,000 minimum balance.

If you don’t meet these requirements, you’ll still earn 0.28% APY, which is a win in my book. (It’s still four times higher than the current national average).

Open a CIT Savings Builder account today or read our full review.

Ally Online Savings

In case you couldn’t tell, Ally Online SavingsChecking Vs. Savings Accounts: Which One Is Better? - Ally is *hands down* my favorite savings account of all time. 

Not only do you earn 0.5% interest on your entire balance, but there are no monthly fees, and you can open an account with literally just a penny. It also has three built-in tools to help you automate and accelerate your savings:

  1. Savings buckets. Set up dedicated buckets for all your savings goals — whether that’s an F-You fund, a road trip, or a stash of cash for unexpected vet bills
  2. Recurring transfers. Put your money on autopilot by having some of it moved to savings each time you get paid.
  3. Round-ups. Round up your debit card purchases and let Ally sweep the spare change into savings.

Open an Ally Online Savings account today or read our full review.


For most people, it makes sense to have one checking account (for everyday spending) and one savings account (for stashing away money for emergencies, vacations, and future purchases). But not all checking and savings accounts are created equal.

Save yourself the headache — and fees — by choosing one of the best checking or savings accounts on this list.

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