Difference Between Checking and Savings

A financial institution normally offers their customers access to various accounts. There are generally two accounts that the customer can choose from; a checking account or a saving account. Although each bank widely varies its banking terms, the requisites of how you can access each account remain universal.

A checking account is normally the banking account that you use in your daily routine. It is the account from where you pay bills, withdraw money and make purchases. A saving account is where you place any monies that you wish to set aside or accumulate for a ‘rainy day.’

Money placed in a saving account will, over time, accumulate a payment of interest. Banks will normally provide each saving account an interest level. For example if you had saved $100 in a savings account with a 3% interest rate, in a 12 month period you would secure an extra $3.00 in your saving account.  Because of the constant movement of money in a checking account, banks pay little or no interest on monies held in these accounts. If you wish to save large amounts of money it is best to place it in a savings account; that way you can earn money while the bank is securely looking after it.

Checking accounts will also offer their customers an ‘overdraft’ facility on their account. If you are in good standing with your bank, they will offer you the facility of using more money than you actually have. The over drawn money is usually requested to be repaid at the end of the month. Savings accounts do not offer this clause. From a savings account, you may only withdraw what monies you have invested.

Checking accounts allow you prompt access to your funds.  Savings accounts, on the other hand, have strict rules regarding withdrawal. Some savings accounts will require you to complete a notice period before withdrawal can be made, and some savings accounts will only let you withdraw from your account so many times in a given period.  The benefit of holding a checking account is the flexibility that you can achieve within your account. This type of account will be issued with a debit card, allowing you access to funds when the banks are closed, and allowing you to pay for items without dealing in cash.

Thanks to today’s technological advances, checking accounts are now available online. In an instant you can securely log on and complete remotely complete instructions. Unfortunately, many savings accounts do not offer such a facility for their customers. No card facilities are offered with these types of accounts; you will still have to physically visit the bank to make a withdrawal from your account.

Summary

1. Checking accounts are used for everyday financial needs, like withdrawing money and making purchases.
2. Savings accounts restrict your withdrawal and do not offer instant access to your account.
3. Checking accounts can be accessed online.
4. Savings accounts are used to securely keep large sums of money that you have been saving.
5. The financial institution will pay you an interest rate for keeping your money in its account.