Checking vs Savings Accounts: The banking sector is a huge part of financial services providing individuals and businesses with facilities such as deposit, credit, loans, investment, insurance, and much more. They also provide various types of bank accounts to provide flexibility and benefits to their users. Let us read more about the two most frequently used bank accounts, checking and savings accounts.
Checking vs. Savings Accounts: Highlights
Checking and savings accounts are two major types of bank account types available for users. There are benefits to opening a checking and savings account. However, if you are not sure whether to open checking or savings accounts, then this article will help clarify your doubts easily.Â
Savings accounts are stable and generally used for saving hard-earned money. However, checking accounts are dynamic and are required when you have frequent withdrawal requirements. Let us know some major differences between checking vs. savings accounts.
Also Read: Types of Bank Accounts in India You Need to Know
What is a Checking Account?
A Checking account is a type of bank account where users manage daily or frequent expenses. These accounts do not consist of maximum transaction limitations or any access limitations. It can easily be used for making bill payments and online purchases.Â
People with a checking account also receive a debit card, passbook, or chequebook when opening this account. This account also consists of net banking and mobile banking services, allowing you to access your money anywhere.Â
Checking vs. Savings Accounts: Benefits of Checking Account
Checking accounts provide various services and are more flexible as compared to savings accounts. Hence, they are more frequently used without worrying about limitations. Let us look at some of the benefits of checking accounts below.
- Checking accounts are used when withdrawal frequency is high.
- You can access funds through ATMs, cheques, etc.
- Different facilities, such as ATMs, Debit cards, and Cheques are provided while opening a checking account.
- There is no limitation on the number of withdrawals in a checking account.
- You can access transaction history or bank statements online.
| Checking vs. Savings Accounts | |
| Name of Account | Current Account |
| Minimum balance | Higher minimum balance requirement in current accounts. |
| Limit on transaction | No transaction limit |
| Interest Rates | It is a no-interest-bearing deposit account which does not provide any interest at all. |
| Benefits |
|
| Debit Card | Yes |
| Internet Banking | Yes |
What are Savings Accounts?
Savings accounts are primitive bank account types used to save and grow deposits made regularly. However, there are certain limitations to the number of transactions and limits. This account type also provides interest facilities based on the deposit in the account to help you grow your personal wealth.
Checking vs. Savings Accounts: Benefits of Savings Accounts
Some major benefits of using savings accounts are mentioned below.
- Savings accounts help you save and grow your personal savings over time.
- It provides interest on the deposits regularly.
- Transaction history and bank statements can be checked and downloaded online.
- Facilities such as ATMs, notification alerts, mobile banking, net banking, and account balance online are available in savings accounts.
| Checking vs. Savings Accounts | |
| Name of Account | Savings account |
| Minimum balance | No minimum balance is required in savings banks provided by various banks. However, in some banks, the minimum balance varies between 5,000 and 10,000. |
| Limit on transaction | The number of transactions can be limited. |
| Interest Rates | The interest rates for various bank savings accounts vary. Most banks provide an interest rate of up to 2.7% for balances upto INR 1 lakh. |
| Benefits | Most simple and accessible banking services to earn interest on savings. |
| Debit Card | Yes |
| Internet Banking | Yes |
Checking vs. Savings Accounts: Difference Table
Some major differences between savings accounts and checking accounts are mentioned in the table below.
| Checking Vs. Savings Accounts | |
| Checking Account | Savings Accounts |
| Checking accounts main purpose is for spending and regular, frequent transactions. | Savings accounts are used to deposit and grow money over time. |
| Funds stored in a checking account can easily be accessed through debit cards, credit cards, checks, online net banking, etc. | Funds can easily be accessed through ATMs, debit cards, etc, but may incur extra fees when the limit is exceeded. |
| When opening a checking bank account, debit cards, ATMs, and passbooks are given. | Debit cards, passbooks, and ATMs must be activated manually after opening a bank account. |
| Interests are none or very low. | It provides higher interest compared to checking accounts. |
| It is often used for paying bills, groceries, and other regular purchases. | It is used for short term or long term saving goals, emergency funds, etc. |
Checking vs. Savings Accounts: Selecting Best Checking or Savings Accounts
Some key points that must be considered while selecting the best checking or savings accounts are given below.
1. Interest Rates
When opening accounts (Checking or savings), you must check the interest rate provided by the bank. Private banks generally provide higher regular interest rates than public sector banks.
2. Minimum Balance Requirements
Most banks have minimum balance criteria where users must always maintain a threshold minimum balance in their account. Failing to maintain the minimum balance involves extra charges. Must enquire about the minimum balance requirements while opening an account.
3. Maintenance or Annual Fee
Many banks charge monthly or annual maintenance fees. These additional fees (if any) must be inquired about when opening a bank account.Â
4. Bank Presence
Also, ensure the bank you select offers major essential services and features such as online net banking, UPI options, cashback or offers, customer care access, SMS banking services, and mobile applications. Also, make sure that the bank’s offline presence is within reach. Find the nearest branch of the bank you are looking for and ensure they are within your reach to provide quick resolutions.
Also Read: Functions of Bank | Major Banking Functions & Services
Do checking accounts come with any fees?
Most private or public banks charge fees for providing checking accounts. Some of the common fees are maintenance fees (monthly), overdrafts, ATMs, etc. However, there are many banks that lay off maintenance fees if customers maintain a minimum balance in their bank account. You must always check the fee schedule before opening a checking account at any bank.
Should I have both Checking and Savings accounts?
It is advisable to have both savings as well as checking accounts. It can be helpful for fulfilling different purposes. Savings accounts can help you grow your money, while current or checking accounts can help you spend it without any maximum withdrawal limitations. You can also connect your checking or savings accounts if they are in the same bank. This will help you easily transfer money between the two linked accounts. A debit card can easily help you avoid overdraft fees, generally due to bounced cheques.
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Checking vs Savings Accounts FAQs
What are checking accounts?
A Checking account is a type of bank account where users manage daily or frequent expenses. These accounts do not consist of maximum transaction limitations or any access limitations.
What are Savings Accounts?
Savings accounts are primitive bank account types used to save and grow deposits made regularly. However, there are certain limitations to the number of transactions and limits.
Is it better to have checking or savings accounts?
A checking account will be more useful if you need to maintain regular expenses without any withdrawal limits. However, savings accounts help you save your money and grow it at the same time.
