What's A Checking Account vs a Savings Account?

Hey everyone, Marli here with another episode of Money Moves. This week we wanted to review the difference between a checking account and a savings account. To start, let's go over the basics, starting with a checking account. 

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Checking accounts are a type of bank account primarily used for everyday transactions such as buying a cup of coffee or lunch, getting gas for the car, writing checks, or getting cash at an ATM. These typically earn very little or no compound interest for the money that you hold in this account, unfortunately. 

Savings accounts are better for storing money and earning compound interest, and because of that you might have a monthly limit on what you can withdraw without paying a fee. Basically, checking accounts are great for the short term money that you might need for food, clothes, or the everyday items and savings accounts are great for, well, saving money! The interest rate and details of these accounts vary from bank to bank so be sure to check them out before committing to a specific account.

Some of the benefits of a savings account is that it helps your money grow because of compound interest, which we'll dive into a little bit later. It also makes setting aside money for future emergencies or larger upcoming purchases like buying a bicycle or a car way easier. 

Some of the benefits of a checking account is that it makes short-term budgeting easier because you can check your monthly expenditures and get a running list of all your transactions every single month. Checking accounts make it extremely convenient to access the money with things like atms, debit cards, or - if you need to - writing checks. Using your checking account is also way safer than carrying around cash in your pocket that can be misplaced or lost. 

So that's the quick rundown of checking and savings accounts. Be sure to take the quiz and test out your knowledge! Until next time, Marli out.