Why You Need Both Checking and Savings Accounts

Opening both a checking account and a savings account is an important first step in taking charge of your money.

With a checking account, you have an easy and cost-effective way to keep tabs on your money, manage your cash flow, and pay bills.

A savings account gives you a safe place to stash your cash and set aside money for financial goals.

Advantages of a Checking Account

• Easy access to your cash. With a checking account, you have easy access to your money through writing checks, using a debit card, or getting cash from an ATM. Plus, you have the security of keeping your money in a bank. Carrying a debit card linked to your checking account is safer than carrying cash.
• Ability to write checks and pay bills. Having money in a checking account allows you to write checks, which costs less than purchasing money orders to pay for things. It also allows you to electronically pay bills—such as car insurance, rent, and credit card payments—that you cannot pay for with cash.
• Ease of online banking. Most people don't carry around a checkbook anymore. With online banking, you can check your balance and pay bills any time you want by hopping online with your phone or laptop.
• The power to cash checks without paying fees. Having money in a checking account allows you to cash checks at your bank or credit union for free. Check-cashing stores charge you a fee for cashing a check. The fee can be as much as 3, 4, or even 5 percent of the amount of your check.

Advantages of a Savings Account

• Safeguard money for future goals. Keep money for a special goal in a savings account rather than mixing it with a checking account, so you won’t be tempted to spend it.
• Get into the habit of savings. It's a smart idea to open a savings account, even if you don't have a lot of money to put aside right now. Even the smallest deposits will add up quickly if you continue to make them over time. Setting aside $10, $15, or $25 for savings each week is a good place to start, and if possible you should aim to save 10 percent of every paycheck.
• Earn interest on your money. Savings accounts pay interest—money that the bank or credit union pays you just for keeping your money with them. That really is free money!
• A safe place for your money. In a savings account, your money is insured up to $250,000 by the Federal Deposit Insurance Corporation at any FDIC-insured bank . In a savings account at a credit union, your money—also up to $250,000—is backed by the National Credit Union Share Insurance Fund .