What is the difference between checkings and savings account

Checking accounts allow quick access to your funds on a day-to-day basis, and some checking accounts are interest bearing. Savings accounts have withdrawal limits, are interest bearing, and are typically used for storing money long term.

It's useful to have both a checking and a savings account in order to keep your money secure, have quick access and save over time.

Purpose of a checking account.

A checking account is a deposit account that lets you keep your money in a secure place while still allowing you to easily pay for daily expenses. If you use checks or have a debit card, the money withdrawn typically comes from your checking account. You can also access funds from your checking account online, and track your spending with online banking.

It is important that you continue to balance your checkbook so you know exactly what you have spent and how much you have available in your account. Checking accounts are an easy way to access your money and use when you need it.

Purpose of a savings account.

A savings account is a smart choice when you want to save money for the future. There is a limit to the number of withdrawals you can make from a savings account, and sometimes there are minimum balance requirements, so day-to-day access isn't as feasible. But while only some Huntington checking accounts earn interest, all savings account feature a range of interest rates, making them a good choice for long-term growth. Compare savings accounts to see which one makes the most sense for you.

Advantages of having a checking and a savings account.

At Huntington, there are several advantages to opening both a checking and savings account. Linking your savings account to a checking account at the same bank makes it very easy to transfer money between the two, as well as waive Monthly Maintenance Fees. You can set up scheduled transfers to help you get to your savings goals even faster. You could also avoid Overdraft Fees by linking your savings account as overdraft protection for your checking account.

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Learn the types of accounts that are available and how to determine which ones you need.

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When you go to a bank to open a new account, you will have a variety of account types and features to choose from. Should you choose the basic checking option or an account that earns interest? Do you want the convenience of a bundled checking and savings account or the higher returns of a money market account?

To make these decisions, it’s helpful to first understand the differences between the most common bank account types. Here are some definitions to help you navigate your banking needs:

• Checking account: A checking account offers easy access to your money for your daily transactional needs and helps keep your cash secure. Customers can typically use a debit card or checks to make purchases or pay bills. Accounts may have different options to help avoid the monthly service fee. To determine the most economical choice, compare the benefits of different checking accounts with the services you actually need.
• Savings account: A savings account allows you to accumulate interest on funds you've saved for future needs. Interest rates can be compounded on a daily, weekly, monthly, or annual basis. Savings accounts vary by monthly service fees, interest rates, and account features. Understanding the account’s terms and benefits will allow for a more informed decision on the account best suited for your needs.
• Certificate of Deposit (CD): Certificates of deposit or CD, allow you to save your money at a set interest rate for a pre-set period of time - which can range from a few months to several years. CDs often have higher interest rates than traditional savings accounts because the money you deposit is tied up for the terms of the CD. Be sure you will not need the funds before the end of the CD term, as early withdrawals may have financial penalties. 
• Money market account: Money market accounts are similar to savings accounts, but they typically require you to maintain a higher balance to avoid a monthly service fee. Both savings and money market accounts have variable rates. Money market accounts can have tiered interest rates, providing more favorable rates based on higher balances. Some money market accounts also allow you to write checks against your funds, but may be on a more limited basis.
• Individual Retirement Accounts (IRAs): IRAs, or Individual Retirement Accounts, allow you to save independently for your retirement. These plans are useful if your employer doesn’t offer a 401(k) or other qualified employer sponsored retirement plan (QRP), including 403(b) and governmental 457(b), or you want to save more than your employer-sponsored plan allows. These accounts come in two types: the Traditional IRA and Roth IRA. The Roth IRA offers tax-free growth potential. Investment earnings are distributed tax-free in retirement, if the account was funded for more than five years and you are at least age 59½, or as a result of your death, disability, or using the first-time homebuyer exception. Traditional IRAs offers tax-deferred growth potential. You pay no taxes on any investment earnings until you withdraw or “distribute” the money from your account, presumably in retirement. Both types of IRAs offer investment flexibility, tax advantages, and the same contribution limits. You may want to discuss which type is best for you with your tax advisor before choosing your account.

Once you understand the types of accounts most banks offer, you can begin to determine which option might be right for you.

  Tip  

Interest rates can be compounded on a daily, weekly, monthly, or annual basis.

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