Unlike in antiquated times, when people aren’t well-grounded on the fundamentals of managing money. Today, you can opt-out for either a checking account or perhaps a savings account to suit your financial security needs. Checking vs Savings account: What are the things you must know when harnessing any of them? In this article, we will be weighing the options.
What Is Checking Account
A checking account most times called a demand Bank account, is a deposit account, which offers great and very easy access to your money.
The checking account actually gives a great number of ways by which you would be able to use your money very easily. Some of the ways are withdrawing probably at an ATM, or a branch, you could also write a cheque, another amazing way is to send an e-check, or if you want to, you can set-up an automatic transfer, and you can send a debit card.
How Does A Checking Account Work?
A checking account, don’t really have any boundaries or limitations if you are to use the money in the account. In some cases, you probably might be given an ATM withdrawing range per day
Also, your card (debit) may minimize the amount you can take away from your account in a day.
Apart from those two conditions, you can buy anything you want, and also pay the bill with the use of your checking account, as long as there’s enough money in your account to pay for the bills.
One thing about checking accounts is that they don’t really give much interest, whereas there are many other accounts that don’t pay bills at all.
In most cases, checking accounts may probably be attached to service charges every month.
There are some financial institutions that do overlook those charges. But that’s only possible when you meet specific requirements needed.
Advantages Of A Checking Account.
Checking account owners quite have some advantages or benefits like; being able to carry out online and mobile banking, they also have access to ATM, they are also eligible to use debit and some more.
The set of people who enjoys the checking account best are the employees. It’s very easy for them to do direct deposit of their paycheck. The employer easily transfers his pay to the employee’s banking account, without spending on transportation to go to the bank, and it saves much time.
In the United States, most accounts (checking) are insured by the FDIC for about up to $250000, this assures the account holder that his funds are very safe at the bank.
Drawbacks Of A Checking Account
As most people said, there’s nothing that has an advantage, without having a disadvantage. So is the case for checking accounts.
You see, most checking accounts are attached with a lot of charges that can be incurred by the account holders. Some of those charges include the maintenance fee, also called the monthly fees, we also the ATM withdrawal charges (when you use another bank ATM machine), and sometimes using customer care service over the phone can incur charges.
Most banks also need a low balance and charge a fee when the account balance has gone below that low balance.
Checking accounts also have other disadvantages like the ATM withdrawal limitations, also charge a fee for using the debit card and the potential overdraft fees.
Open an online checking account in simple steps
Savings Account: What Is A Savings Account?
A Savings account is a kind of bank deposit account that allows you to deposit money for saving purposes. A savings account is constructed in such a way that you would be able to get interested when you save your money. Most savings accounts come along with a higher interest rate when compared to other accounts.
How Does A Savings Account Operate?
Unlike the checking account, the savings account works in a very different way; first by creating an account and depositing some cash in it. As a reward, you are going to be laid some interest on the money you saved by the Financial Institution.
This is how the whole thing operates, when you find your account, they’ll collect the money from you, and give you a sum of money as the interest, and give the money to a customer that applied for a loan, and also collect interest from the client.
Advantages Of A Savings Account
Savings accounts have quite a lot of advantages and disadvantages, but it’s major advantages or benefits are security, FDIC insurance, easy accessibility, convenience to open, and also has the potential to earn interest.
The majority of the total people using banks in the world tend to open a savings account as their first account for preserving wealth, future purposes, and many more. A great way to store money for emergency purposes or life events is to open a savings account.
Here Are Some Of The Advantages Of A Savings Account:
- A savings account lacks difficulties when opening one, sending money from one bank account to another, and also, you would be able to make withdrawals, and deposit funds anytime, in as much as it’s within the Federal limits.
- When your funds are in a savings account (FDIC), it would definitely be insured for up to $250000.
- Like I said earlier, it’s very easy to access, you won’t have to go through any complicated means to access your funds, because a savings account operates in cash.
- Its payment can be made automatically from any savings account that it’s Financial Institution allows.
- Savings accounts are very easy to switch: you can always switch as you like.
Disadvantages Of A Savings Account
When it comes to comparison with other accounts, the interest rate of a savings account is very low.
The Regulation D savings account has quite a few Federal limits when it comes to withdrawing cash; about six times a month. Withdrawing funds more than six times a month would surely incur some charges. In a few cases, your account might be changed to checking if your withdrawal is more than six times in a month.
Yes, I agree that one of the advantages of a savings account is accessibility. But do you know that that can be a disadvantage? Having easy access to your savings can affect your long term savings.
Instability of the savings account’s interest rate is really a bad disadvantage.
How To Open A Savings Account
A lot of banks have actually done their best in making it very convenient to open a savings account. Here are some amazing steps that you are definitely going to pass through when opening a savings account:
- I do tell people that before they create a savings account, consider your needs and pick the right bank that can satisfy the needs, and if not to the fullest, at least to a point that’ll please you.
- Make sure you present the necessary documents required.
- If you want to create the account for yourself, then choose an individual account, but if you want to open it with a partner, choose a joint account.
- Deposit some money into your account after getting to this point.
- Present your application to them after filling out the necessary information.
- Lastly, create online banking (this one is actually optional) if you want to.