Checking vs Savings Account: What’s the Difference?

If you’re planning on opening a new bank account, you’ll be prompted to choose an account type. Bank accounts can be for either checking or savings, so how do you decide which is best for you?  Which type you should open is dependent on your goals for the account and its intended use. Here’s what you should know about the differences between these accounts, and how to find the best banks for checking and savings accounts. 

Checking vs. Savings Accounts

Checking and savings accounts share some similarities. You can use both accounts to safely store your cash, and you can make withdrawals from your accounts when you need money. However, there are some key differences to keep in mind. 

What Are Checking Accounts? 

A checking account is a tool you can use to deposit your paychecks and pay your bills. It securely holds your money, but you can readily access it whenever you need cash. You can withdraw money by visiting a bank or ATM.  By having a checking account, you can complete transactions without the need for physical bills. Instead, you can pay for items with a debit card, by writing a check, or by authorizing electronic payments. Here are a few pros and cons of checking accounts:

Pros of Checking Accounts

• Easy access to cash: A checking account allows you to tap into your money when you need it. Whether you withdraw money to pay your rent or to purchase a gift for your friend, you can have quick and easy access to cash. 
• No limit on withdrawals: As long as you have enough money in the account, checking accounts don’t limit how often you can make withdrawals.
• You may earn a return: Some checking accounts offer perks like cashback or interest and can be very rewarding. Shop around when you’re choosing a checking account to find the one that offers the best return – starting with these personal checking accounts from SouthEast Bank.

Cons of Checking Accounts

• Requires careful budgeting: According to Fortunly, if you’re paying with a debit card rather than cash, you may find yourself spending more readily if you aren’t tracking your budget. Fortunately, SouthEast Bank offers digital budgeting and spending tools that automatically categorize your spending so you can stay on track to meet your goals.

If you’re researching the best banks for checking and savings accounts in Tennessee, consider these personal checking options from SouthEast Bank:

• Bonus Rate Checking: You can earn up to 3.75% APY on balances up to $20,000 with a Bonus Rate Checking Account.¹
• Rewards Checking: With the Rewards Checking Account, you can receive $0.10 cashback rewards for each qualifying debit card transaction.²

What Are Savings Accounts? 

Savings accounts are best suited for long-term financial goals rather than day-to-day expenses. A savings account is where you stash your money to save for things like a vacation, wedding, or the downpayment on a house.  The money in your savings is completely separate from the cash in your checking. Like checking accounts, though, certain savings accounts offer a return on your balance. Here are a few reasons to consider savings accounts:

Pros of Savings Accounts

• Save for specific goals: With a savings account, you can keep your emergency fund or vacation fund separate from your everyday expenses. You can even use multiple savings accounts to save for several goals at once, helping you monitor your progress and stay focused. 
• Earn – or grow – your returns: Some savings accounts, like SouthEast Bank’s Bonus Rate Savings option, offer a return on your balance.³ By pairing a high-yield savings account with a high-yield checking account, you can enjoy watching your money grow faster over time.

Cons of Savings Accounts

• Restrictions on withdrawals: Many financial institutions impose limits on the number of times you can withdraw money from savings each month, and if you exceed the limits, you’ll be charged a fee. If you’re debating a savings account vs a checking account for everyday purchases, checking may be a better fit. 

Choosing a Bank Account

Now that you understand the similarities and differences between checking vs. savings accounts, you can choose the right account for your needs. In general, a checking account makes sense if you want easy access to cash and plan to use it to pay for your routine expenses. By contrast, a savings account is best if you’re saving money for long-term goals and don’t need to make frequent withdrawals. Looking for the best banks for checking and savings accounts? SouthEast Bank strives to offer the utmost in banking options, personalized service and local decision-making.

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Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as financial, legal or tax advice. An attorney, financial advisor, and/or tax advisor should be consulted for advice based on your circumstances.

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