A checking account, designed for regular and frequent withdrawal has low or no minimum balance and no limits on the number of transactions. A savings account requires a minimum balance and allows fewer withdrawals as it is intended for saving money long-term. Naturally, savings account earns you more interest than a checking account, as the bank holds on to a larger sum of money for a longer period.
|Withdrawal Restrictions||None||Typically 3-6 withdrawals a month|
|Designed for||Regular use||Saving money long-term|
|Access||Any time||Often only during bank hours, or by transferring money to a checking account|
|Other features||Overdraft, external online transactions (money transfer, manual/automatic bill pay)||No facilities other than internal online transactions with some banks (i.e., transfer from savings to checking)|
Contents: Checking Account vs Savings Account
A checking account is typically kept for money needed for regular expenditure and smaller purchases payings bills, grocery etc. The quick cash you can obtain from an ATM machine comes from your checking account.
A savings account, as the name suggests is used to save money for a longer period of time. The idea is to let that money accrue and not use it unless you have a big purchase like a house, car or college fees coming up.
edit Account Fees
Checking accounts often have a minimum balance or transaction and monthly maintenance fees. They may also have ATM usage fees, overdraft protection, and fees for online access and bill paying. These vary depending on the bank.
Most savings accounts are fee-free, as long as owners do not exceed their withdrawal limits.
Several other online transactions are possible with a checking account. For instance, with online banking, you can set up overdrafts, automatic bill pay for recurring payments like rent, water/electric bills etc., and even make one time payments manually.
Such transactions are usually not possible with a savings account, although you can mostly transfer money from your savings to checking account online.
This short video explains the two accounts in a nutshell:
edit Interest Rates
Checking accounts typically do not earn interest, although there are institutions that offer a nominal interest on checking accounts. In any case, interest on a checking account seldom exceeds that of a savings account.
Savings accounts always earn interest. The percentage interest depends on the bank, the type of account and the amount deposited, but the average minimum interest rate is just under 1%.
edit Debit Cards
Checking accounts often come with debit cards that allow users to get money from an ATM and pay for items in stores. Debit cards only allow users to spend money that is available in the account.
Savings accounts typically do not come with debit cards, so withdrawals must either be transferred to a connected checking account or done in person at the bank.
There are no limits on the number of withdrawals someone can make from a checking account, including using an ATM card, making bank transfers and paying checks.
Savings accounts are designed for occasional use, and so often have restrictions on how often money can be withdrawn. These are typically three to six withdrawals a month, including electronic transfers and automatic payments.