Checking vs Savings Account

Banks offer many types of accounts, but a checking account and a savings account attract the most traction. Here’s a guide to both.

When you begin your financial life, the first thing you do is create a bank account. While banks offer many types of accounts, checking accounts and savings accounts are among the most common. Both accounts have unique features and work in similar ways.

They both use account numbers to send and receive money via bill payments, wages, wire transfers, and other digital deposits. However, there are critical distinctions between them. Knowing these is vital to make the best out of the account. Read on to get a thorough understanding of current accounts and savings accounts.

What is a checking account?

Current Accounts are sometimes also called checking accounts. It is a bank account that enables you to make deposits and withdrawals. You can use a debit card or write cheques to make withdrawals. You can also visit the bank’s branch or use the ATM to withdraw cash. Debit card purchases, money orders, ACH transfers, and wire transfers are also allowed in checking accounts. You can also make deposits in a branch, an ATM, or online using cash, checks, or money orders.

What is a savings account?

A savings account is a deposit account used to store funds. You can create a savings account to build your emergency fund, save money for a vacation, establish a down payment fund for buying a home, or accumulate cash for home renovation.

Checking account vs savings account: what’s the difference?

Here are the main differences between a primary account and a checking account:

1. Use

The primary distinction between checking vs savings accounts is in their use. Checking accounts are better for businesses that conduct regular transactions. They also have a higher tolerance for the number of transactions you can make. Savings accounts, meanwhile, work better for regular citizens who want to save money and earn interest on it.

2. Withdrawal limit

Though both checking and savings account enable you to access your funds, checking accounts offer a higher limit on withdrawals. It is especially useful for businesses conducting transactions of higher ticket size daily.

3. Interest

Checking accounts enable businesses to transact freely. It is their primary goal. However, they do not earn interest like a savings account. Hence, if your goal is to earn interest on your idle funds, you should open a savings account. IDFC FIRST Bank savings account offers high interest on the idle funds in the account. The interest is also paid monthly, so it can help build a second income.

Regardless of which account you prefer, you can easily open a savings account and checking account online. Many banks, including IDFC FIRST Bank, allow you to open both types of accounts on the same day.

With IDFC FIRST Bank, you can also get high interest on your savings account. The bank’s mobile app offers the full suite of services you need to manage your money such as fund transfers, view account balance, book FD, apply for loan and more.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.