SAVINGS VS. CHECKING ACCOUNTS
January 10, 2020
BALANCING BETWEEN YOUR SAVINGS AND CHECKING ACCOUNTS
Your first bank experience probably involved your parents taking you to put money in a new checking account. It wasn’t exactly action-packed fun, but you still walked out with something you could call your own.
However, if that’s the only account you still have open, it might be time to consider opening a savings account. Let’s take some time to explore how these two accounts are different and how you can utilize them to your benefit.
If you’ve ever used a debit card or written a check, then you’re familiar with how a checking account works. These accounts are designed to handle your day-to-day transactions, allowing for a greater number of withdrawals and debits. It provides an easy way to pay for the items and services you use regularly.
If you’re receiving a regular paycheck, chances are it’s being directly deposited into this style of account from your employer. So, money in and money out—seems simple enough, right? On the surface, it may feel like there’s no need for an additional account. However, if you’re looking to generate growth in your personal savings, then you’re missing out on a key opportunity.
Savings accounts are designed to hold larger sums of money for longer periods of time. Traditionally, these accounts are not tied to debit cards or a designated checkbook—they’re meant to accept more deposits than withdrawals.
This probably sounds super inconvenient, but when working alongside a checking account, it becomes a powerful tool to build savings for future goals. Some of the benefits are purely psychological—having a place to separate funds solely for future use makes it easier to save. However, there are practical benefits as well, such as earning interest on steadily growing balance instead of the constant fluctuation associated with a checking account.
Some banks even offer automatic saving features which allow you to select an amount to automatically transfer from your checking account to savings account each month. This makes it easier than ever to form a savings habit and build towards your personal financial goals. Consult the experts at your bank for a better idea about the savings accounts they offer and how you can utilize them to your full potential.