You need a checking account if you pay bills or receive paychecks regularly; you need a savings account if you want to set money aside and earn interest on it
A checking account is built for moving money in and out frequently. You deposit your paycheck, write checks, use a debit card, set up automatic bill payments, and withdraw cash. Banks expect hundreds of transactions per year. A savings account is built for holding money and earning interest on the balance. You deposit money, leave it there, and the bank pays you a small percentage return. Most savings accounts limit you to six withdrawals per month (though this rule is less enforced now).
Many people need both. You use checking for daily expenses and bills, and savings as a buffer for emergencies or goals. But your situation might call for only one. A teenager with a part-time job might need only checking. Someone who receives a monthly disability payment and rarely moves money might need only savings. A self-employed person managing business income might need checking plus a money market account instead of savings.
Key Takeaways
- Checking accounts are for frequent deposits and withdrawals; savings accounts are for holding money and earning interest.
- You can open a checking account without a savings account, and vice versa — they are separate products.
- Most banks require an initial deposit to open either account, ranging from zero to $100 or more depending on the bank.
- If you receive government payments like Social Security or tax refunds, you need a checking or savings account to receive them by direct deposit.
- Some banks charge monthly fees on checking accounts unless you meet balance or deposit requirements; savings accounts rarely charge fees.
When you need a checking account
Open a checking account if you receive regular income (paycheck, benefits, pension) and need to pay bills or buy things regularly. Employers and government agencies deposit paychecks and benefits directly into checking accounts. Landlords, utilities, and insurance companies expect payment from a checking account or debit card. If you have automatic bill pay set up, it draws from checking.
You also need checking if you want a debit card for everyday purchases. Most debit cards are tied to checking accounts, not savings accounts. Some banks offer debit cards on savings accounts, but it is less common and the account may have withdrawal limits that make it inconvenient for regular spending.
Checking accounts typically come with a checkbook, though fewer people use checks now. If you need to pay a landlord, contractor, or medical office by check, you need a checking account. Some smaller businesses and government offices still require checks for certain payments.
When you need a savings account
Open a savings account if you want to set money aside and earn interest on it. Even at current rates (usually 4% to 5% annually at online banks), a savings account pays more than a checking account (usually 0% to 0.01%). If you have $5,000 sitting in a non-interest checking account, you earn almost nothing. In a savings account at 4.5%, you earn roughly $225 per year on that same $5,000.
A savings account also creates a mental boundary between money you spend and money you keep. Psychologically, moving money to a separate account makes it harder to spend on impulse. Many people find this useful for building an emergency fund or saving toward a goal.
You do not need a savings account if you have nowhere to put extra money or if you prefer to keep all your money in checking. Some people live paycheck to paycheck and never have a surplus to save. Others use investment accounts (brokerage accounts, retirement accounts) instead of savings accounts for long-term money. Both are valid approaches.
Banks that require both accounts
Most banks let you open either account alone. However, some banks — particularly smaller regional banks and credit unions — require you to open a savings account first or as part of membership. A few banks bundle checking and savings together as a single product with one monthly fee.
Before opening an account, check the bank's website or call to ask whether you can open checking without savings, or vice versa. Online banks almost always let you choose. Traditional banks (Chase, Bank of America, Wells Fargo) let you open either account separately. Credit unions vary; some require a savings account as a membership requirement, though the minimum deposit might be as low as $5 or $25.
Minimum deposits and monthly fees
Most banks require an initial deposit to open an account. This ranges from zero (many online banks) to $100 or $300 (some traditional banks). The deposit is your own money — it is not a fee. You can withdraw it immediately after opening if you want, though most people leave it in the account.
Monthly fees vary widely. A basic checking account at a traditional bank might cost $10 to $15 per month unless you maintain a minimum balance (often $500 to $1,500) or set up direct deposit. Online banks and many credit unions charge no monthly fee on checking. Savings accounts rarely have monthly fees; if they do, it is usually only if the balance falls below a threshold like $100.
If you are on a tight budget, an online bank or credit union checking account with no monthly fee and no minimum balance is your best option. If you need a physical branch to deposit cash, a traditional bank or credit union is worth the fee if you can meet the balance requirement.
How to receive government payments without a bank account
If you do not have a checking or savings account, you can still receive tax refunds, stimulus payments, and benefits through a prepaid debit card or check by mail. The IRS and Social Security offer these alternatives, though direct deposit to a bank account is faster and more secure.
A prepaid debit card works like a checking account for receiving money, but you do not need to open a bank account. The government loads your refund or benefit onto the card, and you can spend it like a debit card. Fees vary by card; some charge per transaction or monthly maintenance fees. A bank account is usually cheaper if you use it regularly.
If you choose a check by mail, your refund or benefit arrives as a physical check in 2 to 4 weeks (or longer). You can cash it at a check-cashing service, grocery store, or bank, though you may pay a fee ($2 to $5 per check). A bank account avoids this fee and is faster.
Opening an account with no credit history or bad credit
Banks do not check your credit score to open a checking or savings account. They check ChexSystems, a banking history database that tracks overdrafts, bounced checks, and fraud. If you have never had a bank account, you will have no ChexSystems record and can open an account at any bank.
If you have a history of overdrafts or closed accounts due to negative balances, some banks may deny you. In that case, look for a second-chance checking account at a bank or credit union that works with people rebuilding their banking history. These accounts may have higher fees or lower limits, but they are designed to accept applicants with ChexSystems issues.
You can also request a ChexSystems report to see what is on file. Visit chexsystems.com or call 1-800-428-9623 to order your report. If there is an error, you can dispute it.
Frequently Asked Questions
Can I use a savings account like a checking account?
Technically yes, but it is not practical. Savings accounts have withdrawal limits (often six per month), no debit card, and no checkbook. You can transfer money out, but it takes one to three business days. For daily spending, a checking account is designed for this purpose and works instantly.
Do I need both accounts at the same bank?
No. You can have a checking account at one bank and a savings account at another. Many people keep checking at a local bank (for branch access) and savings at an online bank (for higher interest rates). Just make sure you can transfer money between them easily if you need to.
What if I only receive money once a month?
A checking account still makes sense if you pay bills or buy things regularly, even if income arrives once monthly. A savings account alone works only if you never need to spend the money or if you are comfortable transferring it to another account each time you need cash.
Are there accounts that combine checking and savings features?
Yes. Some banks offer a hybrid account or money market account that allows frequent withdrawals (like checking) and pays interest (like savings). These are less common and may have higher minimum balances. Ask your bank whether they offer this option.
What happens if I close my checking account but keep my savings account?
Your savings account stays open and active. You can still deposit and withdraw money, earn interest, and use it to receive direct deposits. You just lose the debit card and checkbook that came with checking. This is useful if you want to keep savings but no longer need to spend from checking.