Father and Son Discussing Finances with Debit Card

Jan 31, 2023

Which one is right for you? Checking vs. Savings Account


- A checking and savings account can work together. In fact, some financial institutions offer the option of opening both together.

- Finding checking and savings accounts with the features that fit your lifestyle is key.

- Don’t forget about the small perks that can set two similar bank accounts apart from one another.

When it’s time to open your first bank account, all the options can get a little overwhelming. From checking accounts to savings accounts to certificates of deposit (CDs) and more, you may not know what is the best option for you.

This can lead you to wondering what the difference is between checking vs. savings accounts. Below, we outline what each account is, how they work, and how having both accounts can be the most beneficial choice.

Checking vs. savings accounts: What’s the difference?

With so many different account types to choose from — checking accounts, savings accounts, high-yield savings accounts, money market accounts and more — how can you ever choose? We’re here to help. Let’s learn the key differences between a checking and savings account.

What is a checking account?

A checking account is used for all your daily financial needs. Want to buy a snack? Use your checking account. Need to pay for a new app for your phone? You guessed it... use your checking account.

The reason it’s called a checking account is because traditionally you’d write a check to pay for things with money in the account. While paper checks still exist, they’ve mostly been replaced by debit cards and online peer-to-peer payment interfaces like Zelle, PayPal, Venmo and CashApp.

Today, when you want to purchase something in a store using your checking account, you swipe your debit card and enter your personal identification number (PIN).

Since checking accounts are for daily use, they generally offer little to no annual percentage yield (APY) — also known as interest. The average APY on a checking account is just 0.03%, though some online banks offer significantly higher APYs. 

But the benefit of a checking account is that you can make as many transactions as you’d like without a penalty. They also usually have no minimum balance requirement — the lowest balance required to avoid a maintenance fee — if you meet certain conditions, such as having your paycheck directly deposited into your account.

What is a savings account?

Unlike a checking account, a savings account is not set up for daily use in most cases. It’s where you can put the money you’d like to save — hence the name “savings account.” 

And because you want your savings to grow and the bank wants to entice you to keep funds in the account, they generally have higher APYs than a checking account. The average APY on a savings account is 0.06% — twice the checking account average. Many online banks offer savings accounts with even higher APYs.

Savings accounts usually don’t have a debit card that you can use at a store. Instead, you may be given an ATM card, so you can withdraw cash from the bank. In addition, you can generally do same-day transfers from your savings account to your checking account.

Be careful when making transactions out of your savings account, as some banks limit the number of fee-free transfers you can make each month. After you pass that limit, your bank may charge a fee for each transaction.

How do you choose the right checking account?

Check out all the features of various checking accounts to find the best one for you. Here are some you may want to watch for.

Minimum balance and opening deposit requirements

When looking for the right account, check for a minimum balance requirement and any fees you may incur if your balance drops below it. The last thing you want is to get penalized because you’re young and still have limited income.

You’ll also want to know what minimum deposit you need to make to open the account. Banks today have brought this requirement way down, often requiring somewhere between $25 and $100. Some banks have even dropped this down to $0. That’s right! You can sometimes open a bank account with no money at all.


It’s uncommon to find a bank account that is not Federal Deposit Insurance Corporation (FDIC) insured, but you still want to verify it is. The FDIC rules state deposits are insured up to $250,000 per individual per institution. For example, if your FDIC-insured bank goes out of business while your money is in it, you can still collect all your funds, given you had $250,000 or less at that institution. On the other hand, if you had $350,000 in two personal checking accounts at the same institution, you would only have FDIC coverage of $250,000 and could lose the remaining $100,000.

Pro tip: Look for a disclaimer mentioning the bank is “member FDIC” to determine if the bank you’re dealing with has this invaluable insurance. To learn more about FDIC rules, visit their deposit insurance page.

ATM withdrawal limits

Checking vs savings account: person withdrawing from an ATM

Virtually every bank has limitations on the amount you can withdraw from the ATM at once. These are typically between $300 and $1,000 per day. To make larger withdrawals, you’ll need the help of a bank teller at one of the branch locations. 

If you think you’ll need to make large withdrawals from the ATM, you’ll want to ensure you’ll be able to at the new bank. This is even more critical with online banks. You can usually access cash via an ATM, but because there aren’t any physical bank branches, you won’t have quick and easy access to larger withdrawals. Instead, you generally need to transfer money to another account or request a check from the bank.

Mobile deposit limits

Mobile deposit has become one of the most popular features in today’s banking, especially with online banks. Look at your prospective bank's mobile deposit limitations and make sure it will work for you, as some can be as low as $500 per day

If you receive a check that exceeds the mobile deposit limit, you must deposit it at the bank, at an eligible ATM, or mail the check to the bank. And all of those options negate the convenience of having a mobile check deposit feature.

Other fees

Banks have to make money somehow, and some of this comes in the form of fees. There are many fees a bank can charge you on a checking account, including:

  • Monthly maintenance fee

  • Overdraft fee

  • Check writing fee

  • Wire transfer fees

  • Certified check fees

  • Foreign transaction fees

  • Out-of-network ATM fee

Many banks have eliminated some of these fees, such as maintenance fees and overdraft fees. Also, some banks will only charge you for outgoing wire transfers, but incoming transfers are free.

Before agreeing to open an account, check all these fees and compare them to your usage. For example, if you get paid via wire transfer — not a direct deposit — you want to ensure that incoming wire transfers are free. Or if a bank charges a monthly maintenance fee but waives it if you meet certain requirements, verify that you will consistently meet these requirements to avoid the fee.


Accessibility is an important issue regarding a checking account, but it means different things to each person. To some, having a physical bank branch to walk into may not be as big of a deal as having a slick mobile app with robust features, which is like having the bank branch in your pocket.

However, others may prefer a bank with a nearby branch so they can make in-person transactions and get more direct customer service instead of a great mobile banking app.

So, find a bank that fits your specific needs in this area to ensure you remain happy with the service.

Cash back

Cash back isn’t just for credit cards anymore. The competitive banking landscape has led many financial institutions to offer cash back on debit card transactions too. While not every bank offers it, many now offer around 1% cash back on all qualified debit card transactions. Some may limit the amount of cash back you can earn, but you can still get a nice chunk of change just for using your debit card.

Greenlight, for example, offers up to 1% Cash Back* on every purchase.

Other perks

Banks also offer a wide range of other perks that may benefit you. So, review all these perks and find a bank that offers ones you think you’ll need. These can include:

  • Overdraft protection

  • Round-up programs

  • Financial literacy courses

  • Budgeting interface

  • Savings goal trackers

  • Online bill pay

  • Financial advisors

Annual Percentage Yield (APY)

You also may want to earn some interest on the cash in your checking account. This will never be a huge amount, but you may want to try and maximize it. Because the APY on these accounts is typically rather low, and most people don’t carry high checking account balances month to month, the APY may not have a big financial impact. However, it remains an important consideration when comparing checking accounts.

How do you choose the right savings account?

Mother and daughter talking about checking vs. savings accounts in the living room

Like a checking account, choosing the right savings account is crucial to ensure you remain satisfied in the long run. You don’t want to keep opening new accounts and transferring cash because you don’t like your account. Here are some things to consider when finding the right savings account.

Minimum balance and opening deposit requirements

Similar to a checking account, when seeking a new savings account, see if there are minimum balance requirements and what fees you may incur if you don’t meet them.

You may also run into an opening deposit requirement. This requirement has come way down over the years, and typically sits between $25 and $100. You may even find out the bank you’re interested in requires no cash to open an account.


Again, similar to checking accounts, you’ll rarely find a savings account that’s not FDIC-insured but it’s still worth checking. Because your savings account will hopefully grow to a significant number, you don’t want to risk losing it at a bank without FDIC insurance if it goes out of business.

Again, look for a disclaimer mentioning the bank is “member FDIC” to determine if the bank you’re dealing with is insured.

Excessive transaction fee

The federal government ended the per-month limit on outgoing savings account transactions, such as transfers to other accounts or withdrawals. But some banks still charge a fee if you make too many transactions — typically more than six a month. 

If you’ll do a lot of cash swapping between your savings and checking accounts, this fee is something to consider.

Annual percentage yield (APY)

APY is far more important in a savings account than a checking account because the cash in your savings account is more likely to remain idle and earn interest. Plus, this interest will compound, so the bank will pay interest on the interest you previously earned, helping your savings grow even faster.

The typical APY from a traditional savings account is 0.06%. If you opt for a high-yield savings account (HYSA), you can get upward of 3.12% as of November 2022.

Greenlight tip: Skip the interest altogether. Opt for rewards instead. With Greenlight Infinity, kids can earn a 5% Savings Reward*², which will help their savings grow while they learn how compounding works.

Also, look out for interest tiers and limitations. Some banks will advertise a high APY but this may only apply to higher balances. For example, a bank may offer 3.12% on balances between $100,000 and $500,000. Interest-bearing banks can also go the opposite direction and only offer higher APY up to a certain balance. For example, earn 3.12% interest on the first $1,000 of your balance, then 1% interest on the remaining balance.

Keep in mind that interest rates will rise and fall with the federal funds rate set by the Federal Reserve. So, the APY you get now may not be the same in a few months.

Checking vs. savings accounts: Which is better for you?

When comparing a checking vs. savings account, it’s like a hamburger vs. a hamburger bun. Sure, you can pick one or the other, but they are really much better together. So, there’s no need to decide between these two accounts. Instead, get both accounts and use them together.

You can use the checking account to handle all your daily needs, then use the savings account to store the cash you’ve set aside for your financial goals and earn interest. You can also connect the accounts and have automatic transfers from your checking to your savings to automate your savings. 

You can also go the reverse route at some banks and use your linked savings account for overdraft protection, where the bank will automatically transfer funds from savings to checking if you overdraft your checking account.

If you have direct deposit, your employer may allow you to automatically place a portion of each paycheck into both accounts, helping you to automate your savings.

Checking vs. savings accounts: You don’t have to choose just one

Father showing Greenlight mobile app and debit card with teens in the background

Skip the checking vs. savings account debate and instead get both and combine their power to help you manage your personal finances. One acts as your daily spending account, while the other acts as your place to save money and watch the interest grow. However, you still should review accounts from various banks to find the ones offering the best perks and features for you.

Greenlight offers both options for kids and teens — with up to 1% Cash Back on all purchases and a 5%* Saving Reward on savings. In addition, Greenlight members get a debit card, a robust mobile banking¹ app, the ability to learn to invest in stocks, and tools to help build financial literacy.

Give the Greenlight app a try and enjoy the benefits of having both a checking and savings account.

*Greenlight and Greenlight + Invest families can earn monthly rewards of 1% per annum, Greenlight Max families can earn 2% per annum, and Greenlight Infinity families can earn 5% per annum on an average daily savings balance of up to $5,000 per family. Only Greenlight Max and Infinity families can earn 1% cash back on spending monthly. To qualify, the Primary Account must be in Good Standing and have a verified ACH funding account. See Greenlight Terms of Service for details. Subject to change at any time.

¹Greenlight is a financial technology company, not a bank. The Greenlight app facilitates banking services through Community Federal Savings Bank (CFSB), Member FDIC.

²Greenlight’s Savings Reward is not interest. See terms of service for additional details.

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