By Amy E Freeman
Most financial institutions offer both checking and savings accounts. So, does it make sense to open a checking account and a savings account at the same bank, at the same time? Here we'll look at the benefits of a checking account and savings account, whether to open both accounts together and how you can take advantage of doing so to help you with money management.
A bank account is a bank account, right? Not quite. When you open a checking or savings account, you usually have different goals and uses for each. A checking account can be thought of as your everyday bank account. You can link it to a debit card, which allows you to withdraw cash from ATMs, pay bills or make purchases at stores or online. With direct deposit, your employer has the ability to put your paycheck directly into your account.
Think of a savings account as your longer-term goals account. You can use it to hold funds for special purchases like a vacation, or goals like an emergency fund or down payment on a home. It also may have withdrawal limits or minimum balance requirements depending on the type of account you have.
A checking account and a savings account are like peanut butter and jelly. They each have their role to play, and when put together, they create an ideal combination for helping you achieve your financial goals. Each account type has distinct benefits.
The main benefit of a checking account is that it gives you a secure place to stash your everyday cash. You can quickly access the money in your account when you need it, either by using your debit card, visiting an ATM or writing an old-fashioned check. Thanks to direct deposit, you get immediate access to your paycheck, without having to visit your bank or wait for your employer's check to clear.
A savings account gives you a secure place to stash your cash for a rainy day or financial goal. Savings accounts typically earn interest, which helps your balance grow. While you usually can't access the cash in your savings account with a debit card, you can make transfers between it and your checking account when needed. If you have your accounts at the same bank, transferring between them is simple and instant.
Opening a checking account and savings account at the same bank has its advantages:
There are some potential downsides to having your checking and savings in the same place.
For example, the streamlined transfers may be a little too streamlined, making it too easy for you to dip into your savings account and spend away your savings. Some people choose to have two savings account and keep one a different bank, making it more difficult to take out funds on a whim.
In some cases, you may miss out on a better interest rate if you keep you savings and checking accounts in the same financial institution. Regardless, many people still choose to keep both their checking and savings together at one bank.
Deciding where to put your money can be a tough decision. It's important to weigh the pros and cons before opening new checking and savings accounts simultaneously. Whether your top priority is maximizing loyalty programs or earning the most interest possible, choosing the right scenario for your financial situation is key. Check out our checking and savings account comparison tools to find a solution that works best for you.
It gives you a secure place to store and access your cash and other payments.
Checking accounts seem simple enough, but how do you know which one is right for you?
Learn the difference and how to get the most from your banking experience.
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Disclaimer: Views expressed may not necessarily reflect those of Citizens. The information contained herein is for informational purposes only as a service to the public, and is not legal advice or a substitute for legal counsel. You should do your own research and/or contact your own legal or tax advisor for assistance with questions you may have on the information contained herein.