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No matter how you choose to spend your money, it鈥檚 good to make sure that you鈥檙e enjoying some of the big-picture benefits that come with checking and savings accounts with your financial goals in mind.
Overall, the difference between checking and savings accounts is that checking accounts are generally used for everyday spending while savings accounts are generally used to stash cash away and grow money through dividends earned.
Checking accounts are often used for regular transactions and associated with a debit card that can help you make everyday purchases and ATM withdrawals. With the adoption of online and mobile banking, you can now check your accounts, review recent transactions, schedule bill payments, deposit checks, and so much more. You can also securely link your checking and debit cards to your smartphone to make easy contactless payments. There are different types of checking accounts, such as free checking accounts or high-yield checking accounts that can lead to differing dividends earned.
Savings, on the other hand, are better for storing money and helping grow that fund through dividends earned.
If your goal is to use a bank account for daily transactions, a checking account is a great option. You can often choose between a no-frills free checking account or a high-yield checking account. The high-yield option offers a higher-than-average annual percentage yield compared to traditional checking accounts, however, they often have minimum balance requirements and fees associated with them, .
There are many factors that should be considered when choosing a checking and savings account. One of the important ones is finding a free checking account. Free checking means there is no minimum balance or limit on number of transactions, no regular transaction fees or service fees and no withdrawal or transfer fees, the .
鈥淚f an account simply offers you ways of avoiding fees depending on your account usage, then it鈥檚 not legally considered a free checking account,鈥� PenFed鈥檚 experts said. 鈥淒on鈥檛 be afraid to shop around before opening your account. From truly free accounts to accounts with minimal fees, there鈥檚 certainly something out there that is sure to meet your specific needs.鈥�
Free checking offers the same features and services on a daily basis as regular checking without the fees. Free checking can also mean simplicity and flexibility by being able to withdrawal and pay into the account and move money around without rules and penalties.
鈥淭here鈥檚 no reason to pay for a service if you can get it for free. It might take a little research to find the right bank or credit union for you, but the savings and flexibility you鈥檒l get from free checking will make you glad you switched,鈥� the experts at PenFed noted.
Savings accounts allow users to earn interest and grow their money.
鈥淚f your goal is to build your savings, savings accounts are often far better places to keep your money than checking,鈥� . 鈥淎 savings account is the ideal place for money you don鈥檛 need to spend right now but can鈥檛 afford to lose. This makes them good places to keep things like your emergency fund and down payment on a house.鈥�
When it comes to choosing a savings account, the best ones have strong interest rates, no monthly fees and offer easy online bank transfers, .
And be on the lookout for other lurking fees associated with savings accounts, NerdWallet warned.
鈥淪ome accounts charge for taking some types of withdrawals, such as online transfers, too frequently,鈥� NerdWallet said.
Search for a savings account that fits your goals and banking habits, Forbes recommends. Compare accounts at various banks as well as credit unions to find what works best for you.
Remember that interest rates on checking and savings accounts can fluctuate higher or lower, Forbes noted.
鈥淲hen the Federal Reserve raises interest rates, your interest rate will likely increase鈥攅ventually. You鈥檒l probably see your yield drop if the Fed lowers interest rates,鈥� Forbes said.
The good news is that you don鈥檛 have to choose between a checking or savings account 鈥� it鈥檚 often a good idea to have both of them to help you meet your financial goals. NerdWallet notes that having both accounts at the same bank or credit union can make it easier to manage your money and can simplify transfers. Some of the banks and credit unions also waive monthly fees if you link checking and savings accounts.
However, you may not find the best checking and savings accounts at the same bank or credit union. In that case, NerdWallet recommends opening a separate high-yield savings account at a different bank.
Read more about and on PenFed Credit Union鈥檚 website. PenFed Credit Union is federally insured by NCUA. To receive any advertised product, you must become a member of PenFed Credit Union.
