Categories: General Tips
You’re probably familiar with checking and savings accounts in general. Do you have either one? Today we’re highlighting some of the differences between the two, when you should use each one, and how these kinds of accounts can help you meet different needs.
What is a Checking Account?
Checking accounts let you make both deposits and withdrawals. If you need to write a check or use a debit card, the money for the transaction comes out of a checking account i. You can also make deposits or withdrawals at an ATM. This type of account is especially useful if you need to pay bills online. When you’re in college, if you move off-campus, you may have rent and utility bills to pay online, so you’d need a checking account for that.
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What is a Savings Account?
On the other hand, savings accounts are designed for holding money that you’re not planning to move or spend anytime soon. If you’re trying to save for college or build up an emergency fund, this is probably the perfect type of account for you. Savings accounts also tend to have higher dividend or interest rates than checking accounts, which makes them a better method for stashing cash and earning interest on it.
Other Considerations
One thing you may want to consider doing is using both a checking and a savings account at the same credit union or bank. If you’re paying your bills and using your debit card and happen to spend more than you have in your account, you could get hit with an overdraft fee. By having the accounts held at the same financial institution and linked, you can easily move money from one to the other, helping to avoid situations where your account might become overdrawn.