Savings Account Vs. Checking Account: Choosing The Right One For You

By Melissa Cook Reviewed by Nima Vahdat Updated Oct 16, 2023
Savings Account Vs. Checking Account: Choosing The Right One For You

Here’s why it’s important to understand the benefits of savings accounts and checking accounts for your financial wellness.

When it comes to bank accounts, they’re not all created equal. Depending on your financial goals, you’ll want to choose one that meets your current and future needs. 


  • Checking accounts work well for spending, while savings accounts grow your wealth.
  • Savings accounts have a higher interest yield and are great for emergency funds.
  • Choose a savings account with at least 2% APY for the best return on investment.

What Is A Checking Account?

Checking accounts are deposit accounts used for fund transfers, deposits, and withdrawals. You can access them through electronic debits, automated teller machines (ATMs,) and checks, and they are generally for storing money for short-term expense use. 

Typically, checking accounts provide little, if any, interest, making them a poor choice for growing your wealth. Many include fees, like overdraft fees, and will insure up to $250,000 by the Federal Deposit Insurance Corp (FDIC.)

Some checking accounts will charge a fee if you don’t meet a minimum deposit, so it’s important to ask prior to opening the account if this is a concern. 

Once opened, you will receive a debit card that is directly linked to your balance, which you can use for online or in-person transactions. 

There are several different types of checking accounts, including commercial, student, business, and second chance. You can talk to your banker to determine which type of account is right for you. 

How To Choose The Right Checking Account

When opening a checking account, you’ll want to find one that doesn’t charge a monthly maintenance fee. 

Banks make a large portion of their money through fees, so that’s something to keep in mind. While some checking accounts may allow you to earn interest on your money, they usually include spending requirements and balance limits.

The vast majority of checking accounts have very low rates, which is why this isn’t the type of account you use to build your wealth. You will also want to ask about their ATM network since many banks have extensive nationwide availability or refunded fees. 

Finally, many banks offer sign-up bonuses when you open a checking account, which is an excellent way to easily earn extra cash.

What Is A Savings Account?

A savings account bears interest on the money deposited. While the interest rates may not be sky-high, they are a great way to store your money while allowing it to grow safely. 

While some savings accounts will put withdrawal limitations on your funds, they are ideal for short-term savings, building emergency funds, and saving for specific goals like a vacation or car. The vast majority of savings accounts offer flexible rates, which means the financial institution can adjust their interest rates at any time.

These changes are often triggered by the federal fund rate and can be frustrating for those looking to grow their nest egg more quickly. Fortunately, many banks offer high-yield savings accounts, which provide a significantly higher interest rate in exchange for a larger minimum deposit.

Some savings accounts may require you to maintain a minimum balance, while others don’t have balance requirements. You can transfer money in and out of these accounts using mobile banking, ATMs, direct deposits, and electronic transfers. 

Prior to 2020, the Federal Reserve set a limit of six withdrawals per month for every savings account, but in April of that year, they withdrew that law. While some banks still adhere to this limit, many no longer do. 

If you need to take money out of a savings account with a six-per-month limit, you may want to consider switching to a checking account. Although you won’t receive the same interest, you will avoid the fees associated with exceeding the limit, which can be between $5 and $10 per withdrawal. 

How To Choose The Right Savings Account

When choosing a savings account, look for one with no monthly fees, online bank transfers, and high interest rates. You want to stick to accounts with at least a 2% annual percentage yield and no service charges. 

Always ask about fees for online transfers, minimum balance requirements, and any other charges the account may incur. 

Why Should I Look For A High APY?

Accounts that incur a high APY allow you to grow your wealth faster, with little to no effort. It’s understandable that high interest rates aren’t a priority for checking accounts since they are designed for spending, but savings accounts are designed for growth.

An average savings account has an APY of just 0.45%, but many credit unions and banks offer accounts that are higher than average. If possible, choose a savings account with 2% or higher APY as they will give you the best return on investment. 

Let’s take a closer look at how a high APY can make a difference in growing your balance. If you deposit $3,000 into a savings account earning 0.05% APY, you will earn about $1.50 in one year. 

Now compare that to a 2% APY account, and your balance will increase by $60 in the same time frame. That’s almost 60x more earnings without any effort on your part. While it won’t make you a millionaire, a high APY will help you grow your money significantly faster. 

The money you earn from your higher interest rates can go toward debt relief, retirement savings, or buying a house. 

Are There Alternatives To Savings Accounts?

If you’re looking to earn more interest on your money but don’t want to open a savings account, there are options. 

Money market accounts often require a higher minimum balance, but they can grow interest like savings accounts and may provide you with checks and a debit card.

If you qualify, you can open a premium checking account, which has a higher yield APY and additional benefits. While these accounts require a higher minimum balance, the perks may be worth it if you can meet the criteria. 

At Americor, we understand the importance of managing your finances wisely. 

If high-interest debts are impacting your savings and financial well-being, explore our debt relief solutions, including debt settlement and debt consolidation, to regain control of your financial future.

If your debt has become unmanageable and you have difficulty making your debt payments each month, then you should consider negotiating a debt settlement and an affordable payment plan that suits your budget.

Talk to one of our certified Debt Consultants, for free, who can provide personalized advice tailored to your specific needs.

By taking proactive steps, you can put an end to your financial stress and work towards a brighter financial future. Remember, there is always hope for debt relief, and our team of experienced professionals are ready to guide you on your journey to regaining control of your finances.

For more information on Americor’s debt relief services, contact us today to see how we can help you eliminate your debts, and get on the fast-track to becoming completely debt-free!



Melissa Cook

Melissa has a degree in English and marketing from University of California Irvine. She is a creative and accomplished content writer and editor with comprehensive experience developing rich, compelling content for a variety of websites. With her expertise in writing a broad range of content, combined with outstanding interpersonal skills and commitment to exploring innovative ideas, Melissa has done an excellent job developing content for blogs, articles, social media, and the company website. When she is not writing, Melissa spends most of her time cooking, traveling the world, and catching her favorite Broadway shows.