Should I choose a checking or savings account?

Every day you make hundreds of choices. Should you wear jeans or dress pants to work? Eat a burrito or sandwich for lunch? Take public transit or hop in a cab? These may be easy questions to answer, but sometimes you get stuck on a question because you don’t know enough about the relative merits of one choice versus another.

This may be especially true when focusing on finances, particularly when comparing different types of bank accounts. It can seem like a puzzle, right? If you’re debating whether to open a checking account or savings account, you’re probably ready for a rundown of the benefits of each account type. The answer to the checking vs. savings account question will ultimately come down to how you intend to use your account and the funds you park there.

Make one of today’s choices easier by answering the following questions to decide whether you should open a checking account or savings account:

Do you need regular access to your funds?

As you consider the merits of a checking vs. savings account, here’s some food for thought: If you want to deposit money that you plan on regularly accessing for everyday spending, a checking account is the way to go.

“If you anticipate heavy monthly traffic in your account from paying your bills—such as student loans, car loans, credit cards, auto insurance, mortgage—then it’s best to set up a checking account,” says Ogechi Igbokwe, founder of a free personal finance library.  

Igbokwe adds that federal law limits the number of certain types of withdrawals and transfers from savings accounts.¹

How do you want to access your funds?

If you’re trying to compare checking vs. savings accounts, consider how you’ll access your funds.

When deciding to open a checking account or savings account, Igbokwe says easy access to your money is an important checking account benefit to consider.

“Checking account holders have access to online and mobile banking, ATMs and the use of debit cards and checks to make purchases or withdraw funds from the account,” adds Alexander Lowry, finance professor at a college in Massachusetts.

You can still get access to online and mobile banking if you open a savings account, and you can have official checks drawn on your account. Bonus: If your savings account is at the same financial institution as your checking account, you could also use your debit card for ATM withdrawals. While savings accounts don’t often allow you to write checks for purchases, you can transfer or withdraw your funds ahead of time.

How much are you looking to deposit?

If you’re thinking about whether to open a checking account or savings account, it may be helpful to consider how much your money can earn in both accounts.

Since checking accounts don’t typically pay interest, they may be better suited for smaller balances. Still, some offer other rewards, such as Discover Cashback Debit, which allows you to earn 1% cash back on up to $3,000 in qualifying debit card purchases each month.²

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If you’re looking to open a checking account or savings account and want to deposit a larger amount of money—perhaps you want to start an emergency fund or are planning for a big financial milestone—you might want to put it in savings.

“[Savings accounts] are ideal for individuals looking to save while earning interest,” Lowry says.

Should you use both a checking and savings account?

While choosing a checking or savings account depends on your financial needs, many people ultimately find that having both types of bank accounts is the best way to improve their money management and achieve their financial goals. 

“Using a savings account can increase your propensity to save,” Lowry says. “On the other hand, checking accounts help you keep better track of what you spend. Thus, the two accounts can work hand in glove to help set you on a better path to financial knowledge and stability.”

Take full advantage of your new account

If you decide to open a checking account, it’s smart to manage your checking account wisely. 

“A checking account is a primary tool for managing personal finances,” he says. “Be sure to realize the full opportunity it avails by signing up for direct deposit, signing up for online and mobile banking, taking advantage of alerts, and arranging automatic payments.”

Now that you’ve figured out whether to open a checking account or savings account, you can move on to answering all the other questions that pop up in a given day. We hope you’re pleased with the outcome of that burrito versus sandwich lunch debate, too.

Still can’t decide between a checking and savings account? Try diving deeper into the benefits of an online checking account. 

¹ Federal law limits certain types of withdrawals and transfers from savings and money market accounts to a combined total of 6 per calendar month per account. There are no limits on ATM withdrawals or official checks mailed to you. To get an account with an unlimited number of transactions, consider opening a Discover Cashback Debit account. If you go over these limitations on more than an occasional basis, your account may be closed. See Section 11 of the Deposit Account Agreement for more details.

² ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), online sports betting and internet gambling transactions, and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo^® and PayPal^®, who also provide P2P payments) may not be eligible for cash back rewards. Apple Pay^® is a trademark of Apple Inc. Venmo and PayPal are registered trademarks of PayPal, Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.

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