Bank Accounts Explained: Savings vs. Checking

One of the perks of being financially independent is you have the freedom to make decisions about your money and what to do with it. One of the more financially prudent options is to deposit your money into a checking or savings account for safekeeping. Each type of account is secure and gives you the flexibility to dispense your money as you please. Read about the advantages of both below and decide which one works best for you.

A savings account is a great option if you are looking to grow your money. It enables you to keep money on deposit while accumulating interest over time. The minimum balance for opening the account is typically very reasonable, and your money multiplies as long as you sit on it.

Banks offer varying interest rates for their savings accounts, so do your research and choose the bank that has the highest possible rate with the most flexibility to release your funds. Understand that you will have to visit a branch location or an ATM to withdraw money and be sure to discuss transaction fees with your bank so you know what you are obligated to pay.

Checking accounts are ideal for practical spenders. With a checking account, you can pay your bills with relative ease through the use of personal checks and online bill pay options. This eliminates the need to go to a bank every time cash runs out and you can spend your money with checks or your debit card anytime you please.

Swiping your debit card to pay for items is fast and easy. But it can also make it difficult to keep track of what you're spending. Be careful to check your account balance, or save receipts and write down what you spend so you do not overdraw your account.

Both savings and checking accounts are great options for managing your money. The account you open depends on your needs and what you plan to do with your money—there are advantages and limitations to both. Decide whether you want the profitability of a savings account or the freedom and ease of spending that accompanies a checking account.

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