Both hold your money at a bank and protect it with federal insurance
A checking account and a savings account are both deposit accounts held at a bank or credit union. Both let you store money safely, and both are protected by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) if you use a credit union. That protection covers up to $250,000 per account type per person at the same institution, so if your bank fails, your money is still yours.
Both accounts also require you to provide identification and proof of address when you open them. You'll need a Social Security number or tax ID, and most banks will ask for a government-issued ID and a recent utility bill or lease. Both accounts are tied to your name and your credit history, though neither one directly affects your credit score the way a loan or credit card does.
Key Takeaways
- Both checking and savings accounts are FDIC-insured up to $250,000 and require the same identification documents to open.
- Both accounts let you deposit money, withdraw cash, and track your balance through online banking or a mobile app.
- Both accounts are held at the same bank or credit union and can be linked together for transfers between them.
- Both accounts charge fees in some cases, though the reasons and amounts vary by account type and bank.
Both let you deposit, withdraw, and monitor your balance
With either account, you can put money in through direct deposit, mobile check deposit, or in-person at a branch. You can take money out at an ATM, at a teller window, or through a transfer to another account. Both accounts come with online banking access and a mobile app so you can check your balance, see your transaction history, and move money between accounts at any time.
Both accounts also give you a way to receive payments. With a checking account, you get a debit card and checks. With a savings account, you typically get a debit card but no checks. Either way, you can receive direct deposits from an employer, government payment, or another person's bank transfer.
Both can charge monthly fees and have minimum balance requirements
Banks make money from both account types by charging fees. A checking account might charge a monthly maintenance fee of $5 to $15 if you don't keep a minimum balance or don't set up direct deposit. A savings account might charge $3 to $10 per month for the same reasons. Some banks waive these fees entirely if you meet certain conditions — like maintaining a $500 minimum balance or having your paycheck deposited automatically.
Both accounts can also charge you for specific actions. Overdraft fees apply to both if you spend more than you have. ATM fees apply to both if you use an out-of-network machine. Excess withdrawal fees can apply to savings accounts if you move money out too many times in a month. The fee structure varies widely by bank, so comparing banks before you open an account can save you money over time.
Both are linked to your Social Security number and banking history
When you open either account, the bank runs a check through ChexSystems, a banking history database. This check looks at whether you've had accounts closed for overdrafts, fraud, or other problems at other banks. A bad ChexSystems record can prevent you from opening a new account at most banks, though some banks offer second-chance checking for people with negative history.
Both accounts are also tied to your name and Social Security number in the bank's system. If you owe money to the bank or to a creditor who has a judgment against you, that creditor can potentially freeze either account. Both accounts are also reported to the IRS if you earn interest on them — though interest rates on both are typically very low right now.
Both can be opened online or in person, and both require you to choose account features
You can open either account entirely online at most banks, or you can go to a branch in person. The online process usually takes 10 to 15 minutes and asks you to verify your identity through your Social Security number and a government ID. In-person opening takes about the same time and requires you to bring a photo ID and proof of address.
When you open either account, you'll choose features like whether you want overdraft protection (which links your accounts so a withdrawal from one covers a shortfall in the other), whether you want paperless statements, and whether you want a debit card. These choices apply to both account types and can be changed later through online banking or by calling the bank.
Both accounts work together when you need to move money quickly
If you link a checking account and a savings account at the same bank, you can transfer money between them instantly through online banking or a mobile app. This is useful if you overspend from checking and need to move money from savings to cover it, or if you want to move money from checking into savings to keep it separate. The transfer is free and shows up immediately in both accounts.
Some banks also let you set up automatic transfers between the two accounts. For example, you can arrange for $50 to move from checking to savings every payday, or for money to move from savings to checking if your checking balance drops below a certain amount. These automatic transfers work the same way as manual ones — they're free and instant.
Frequently Asked Questions
Do I need both a checking account and a savings account?
No. A checking account alone is enough for most people's daily spending and bill payments. A savings account is useful if you want to keep money separate and earn a small amount of interest, but it's not required. Some people use only a savings account if they don't write checks or use a debit card often.
Can I have multiple checking accounts or multiple savings accounts at the same bank?
Yes. Most banks let you open as many accounts as you want. Some people open multiple savings accounts to separate money for different goals, or multiple checking accounts to separate personal and business spending. Each account is insured separately up to $250,000.
If my bank closes, do I lose the money in both accounts?
No. Both your checking and savings accounts are protected by FDIC insurance up to $250,000 each. If the bank fails, the FDIC pays you back. The process usually takes a few weeks, and you can access your money through a temporary account while the transfer is being processed.
Can I be denied a checking account or savings account?
Yes. Banks can deny you based on a negative ChexSystems record, unpaid overdrafts at other banks, or fraud. Some banks offer second-chance accounts for people with banking problems, though these may have higher fees or lower limits on debit card spending.
Do I pay taxes on money I keep in a checking or savings account?
No. You only pay taxes on interest the bank pays you. Interest rates are very low right now, so most people earn less than $10 per year in interest and don't owe any tax on it. The bank will send you a 1099-INT form if you earn $10 or more in interest during the year.