Knowing the Difference Between Checking Accounts and Savings Accounts

When it comes to taking care of your finances, you shouldn’t take any chances. This is one of the reasons why you need to open a bank account. Managing your finances can feel confusing especially if you keep all your money in just one account. Ideally, you have an account that allows you to access your money for everyday needs, and another one for your savings and goals. This is where a checking and savings account comes in.

If you’re new to the financial journey, you may not know the purpose of these accounts yet. This article will break down the differences between these two accounts so you can choose the best one for your financial goals and utilize these financial products to your advantage.

Checking Account

Checking accounts are usually utilized for everyday expenses, large payments, and receiving paychecks. It’s a great financial tool that allows you to keep track of your budget while allowing you to conveniently access your money.

This type of account comes with a checkbook so you can easily pay for large purchases in a secure manner, which are often used to pay for large loans and significant purchases. RCBC offers different types of checking accounts for both personal and business uses that can suit your needs.

Access to Money

Checking accounts give you access to multiple modes of payment: debit, check, and online transfer. This account was designed for spending, and it’s meant to make it much easier for you to access your money.

Once you master the art of how to write a check, you can use it to pay for your leases and loans. Especially because most institutions will require post-dated checks for large purchases. 

Interest Rates

This type of account typically earns low or no interest.

Fees

Checking accounts have several fees that may be incurred. Some of these fees are bounced check fees, monthly service fees, and temporary overdraft fees. The amount may vary depending on the bank and the account type. For RCBC, these are the checking fees and charges you may expect.

Minimum Balance Requirements

A checking account usually has a higher minimum deposit and maintaining balance in comparison to savings accounts. For premium checking accounts, the minimum deposit and maintaining balance can be much higher.  

Online and Mobile Banking Options

To get a better overview of your finances, you can enroll your checking account to your bank’s online and mobile app platforms.

Additional Features

Checking accounts have an overdraft facility that allows you to withdraw money from your checking account even if there’s no more money left. Think of it as a credit function for your checking account.

Overdraft limits may vary per bank and account type.

Savings Account

A savings account is commonly used for storing emergency funds and saving for goals. The higher interest rate and easy access that this type of account provides make it the ideal account for growing your money while you’re not using it.

There are different examples of savings accounts. Some accounts may come with an ATM card, passbook, and personal insurance. So, make sure to go through the different savings accounts that your bank offers and pick out the best one for you.

Here are some features that differentiate savings accounts from checking accounts:

Access to Money

Compared to a checking account that allows you unlimited access to your money, savings accounts have withdrawal limits that hinder you from using money from this account. This is because savings accounts were designed to hold and grow your money, so it’s not structured for your day-to-day transactions.

Interest Rates

Savings accounts have higher interest rates than checking accounts, making it the ideal option for storing money that won’t be used immediately.

Fees

Much like checking accounts, savings accounts may also come with a monthly service fee if you don’t meet the minimum maintaining balance.

Minimum Balance Requirements

Savings accounts usually have a lower minimum deposit and a low maintaining balance requirement. However, the balance needed to earn interest can be much higher than the minimum maintaining balance.

Online and Mobile Banking Options

Savings accounts can be enrolled in online and mobile banking so, you can still send money to other accounts and pay your bills.

Additional Features

Some savings accounts come with free insurance.

Which One is for You? Checking Account vs Savings Account

Both checking and savings accounts play a crucial role in financial management. The key to knowing which one you need for now is dependent on what you’ll be using it for. If you want an account for your long-term goals, then opt for a savings account, but if it’s for daily expenses, then a checking account is best.

If you’re still not sure, you can open an all-in-one bank account, so you get the best of both worlds.