Checking vs. Savings?
Make the Most of Both Accounts

When it’s time to put your money in the bank, you might think you need to settle the matter of checking vs. savings accounts and pick one. In fact, most people have both checking and savings accounts. Why? Because each account performs a different function. And it’s easy to have both; most people keep their checking and savings accounts at the same bank or credit union.
Even if you decide to open both, it’s important to understand the difference between savings accounts and checking accounts. This will help you to make smarter financial decisions and to manage your money so that it can work for you.

What to look for in a checking account

Not all checking accounts are created equal. When you’re looking for a bank or other financial institution, ask about how it handles the following aspects of these basic bank accounts:

  • Digital banking tools
    It's assumed these days that all savings and checking accounts will allow online banking, but the level of service can differ. Many banks offer digital banking tools such as mobile check deposit, the ability to pay bills through an app, and account alerts to your phone if the bank suspects fraud or if you are about to spend more than you have in your account. Before opening a bank account, check to make sure the mobile banking services you value the most are offered.

  • ATM availability
    Since checking accounts offer easy access to your money via ATMs, look at how many ATMs a bank offers as you decide where to open your account. You may need a bank with many ATMs around the country, or you might prefer a bank with an ATM close to your home or workplace so you can withdraw money when you need to. Be aware that some banks charge a fee if you use a competitor’s ATM, while others offer accounts that allow you to use another bank’s ATMs without fees.

  • Monthly maintenance fees
    Some banks charge a monthly maintenance fee to keep your account open — often around $10-$25 a month. Accounts without fees are preferable, but they might have requirements for dropping the fee. For example, you might need to use direct deposit or always keep a certain amount of money in your checking account.
  • Minimum balance requirement
    Some banks require that your average daily balance stay above a minimum balance. The required amount varies, but it is often around $100 or $150.

  • Foreign transaction fees
    Some banks charge a fee when you make purchases in another country in its currency or make online purchases in the currency of another country. You also could get hit with a hefty fee if you withdraw foreign currency from an ATM when you are traveling abroad or if you make international wire transfers or otherwise transfer money abroad. If you are a frequent traveler, foreign transaction fees are an important consideration. And if you aren't, it's wise to ask your bank about these fees before you take off for a special trip.

  • Interest rates
    Although checking accounts generally offer little or no interest, it's still worth asking your bank about the annual percentage yield (APY) it may offer.

What to look for in a savings account

While checking accounts are great for spending money, savings accounts are designed for the opposite action — holding onto it. Savings accounts offer a place to store money and earn interest. They do the slow but steady work of building your emergency fund or saving for a trip or a car. Here are some things to consider when you are about to open a savings account. 

  • Interest rates
    Savings accounts generally will beat checking accounts when it comes to interest rates. Many banks will offer different levels of savings accounts with higher interest rates as the minimum daily balance grows.

    And while they are not technically a savings account, certificates of deposit (CDs) are another low-risk savings tool. The customer deposits the money and leaves it there for a fixed amount of time, or pays an early withdrawal fee. The bank might set terms such as 3 months, 6 months and 12 months, with interest rates sometimes increasing as the term does.

  • Digital banking tools
    Many banks offer online services for savings accounts, such as the ability to transfer funds from one account to another. Apps can allow mobile check deposits, for example, and they could make it easy to set up direct deposits. They also might offer account alerts and help with reaching savings goals.
  • ATM availability
    Presumably, you will not want to access your savings account often. When you do need access, however, you will want an ATM nearby. This factor might mean more for a checking account, but make sure your financial institution has ATMs where you are likely to need one. You also should check on ATM fees. Because of digital banking tools, you might be able to transfer money from savings to checking to access cash through an ATM.

  • Minimum balance requirement and service fees
    Some banks require that your minimum daily balance stay above a certain level to avoid paying a monthly service fee. Banks also may require a minimum opening deposit. Customers also might avoid a service fee by making automatic transfers from checking to savings.

Should your money go into checking or savings?

Many banks encourage people to open both types of accounts and offer perks for doing so. The arrangement makes it easy to transfer funds from one account to the other. It also raises the question of how much money to keep in each one.

Because a checking account acts as a way station for your money, the ideal amount to keep in the account varies from person to person. It depends, in part, on the amount of monthly bills a person needs to cover. That’s a good starting point for an average balance. There also is the question of maintaining a certain minimum balance to avoid fees and gain perks.

Some people prefer to keep the minimum amount in a checking account, because there is little or no interest paid on the balance. Some adhere to a rule that calls for keeping enough to cover two months’ worth of expenses, plus another 30% of monthly expenses as an emergency buffer.     

Many experts recommend keeping three to six months’ worth of living expenses in your savings account. This can cover the cost of living in case your income drops unexpectedly. If you are laid off, you have your hours at work reduced, or you need to take time off for an extended period of time due to illness, you can rest easy knowing your monthly expenses will be covered while you figure out your next steps. 

Is money safe in checking and savings accounts?

As long as you choose a bank that has Federal Deposit Insurance Corporation (FDIC) insurance, both your checking and savings accounts will have protection. 

FDIC insurance covers deposits of up to $250,000 per depositor, per bank, per ownership category, in the event that an FDIC-insured depository institution fails. The FDIC identifies several ownership categories, such as single accounts, certain retirement accounts (like an IRA), and employee benefit plan accounts. For each category, the FDIC adds the total in each account and protects up to $250,000. So, if the total of your checking, savings and money market accounts (which are in the same category) is $250,000 or less, all of those deposits are covered. If you had another $250,000 in an IRA with the same bank, that would be covered too.   

TD Bank is an FDIC member, so those protections cover its:

  • Checking options: TD Complete Checking, TD Beyond Checking and TD Essential Banking
  • Savings options: TD Simple Savings, TD Signature Savings and TD Choice Promotional CDs.


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This article is based on information available in December 2022. It is for general informational purposes only. It is not intended to provide specific financial, investment, tax, legal, accounting, or other advice and should not be acted or relied upon without the advice of a professional advisor. A professional advisor will recommend action based on your personal circumstances and the most recent information available. For specific advice about your unique circumstances, consider talking with a qualified professional.

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