A checking account is used for everyday transactions, whereas a savings account is used for saving money for longer. The main idea of keeping money in a savings account is to earn interest on the funds, so the major difference between the two kinds of accounts is the amount of money being saved.

Let us understand the features of both types of accounts to highlight the differences and make a comparison of savings vs. checking accounts.

Savings accounts

• Long-term investment
  As the name suggests, these accounts are used to save money for long-term goals. The number of withdrawals in a month is limited on these accounts, which aims to discourage you from spending the money in a savings account.
• Lower fee
  Banks use the money in savings bank accounts to fund other loans, and you also earn some interest on the balance in your account. The cost of maintaining a savings account is not as high as that of a checking account.
• Interest payout
  The interest on the balance in a savings account is not a lot, but you can accumulate a good sum over time, which makes the interest a decent figure. While planning to open a savings account, you should look at the interest rates offered by multiple banks before making a decision. The interest rate can also depend on the amount you’re willing to keep in your account.

Checking accounts

• Overdraft charges
  The bank may lend you money even if your account has no balance, and it charges an overdraft fee for this service. This is a major factor that differentiates both types of accounts in the savings vs. checking accounts comparison.
• Monthly maintenance charges
  These charges are payable at the end of every month and are consolidated expenses for using the account.
• Insufficient funds fee
  This fee applies when you spend the money that you do not have. The main difference between this fee and overdraft charges is that the insufficient funds fee is payable even when the bank is not paying on your behalf or when you’re not borrowing from the bank.
• Additional fees
  There are other fees like ATM usage to withdraw your money, but this fee is inconsistent and may not be charged by all banks. Apart from this, there could be other charges like those for stop-payment requests, debit card replacement, and wire transfers.

Despite the differences when comparing savings vs. checking accounts and the fees levied on checking accounts, both types of accounts are useful in the longer run. If you’re only using checking accounts, you might spend more than you ought to spend in a moment of weakness, but savings accounts help you with that. Similarly, spending daily is slightly difficult when it comes to savings accounts, so checking accounts can be used to meet these needs.