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What is a Checking Account Vs. a Savings Account?

07.15.2022 / Chelsea Stefanelli - Director - Deposit Operations and Specialized Services
Checking Savings

A checking account has a different purpose than a savings account. A checking account is used for frequent, daily financial transactions like buying groceries or gas. In comparison, a savings account is used to save for infrequent expenses like vacations or as an emergency fund. Read on to learn about how each type of account is used, as well as the benefits they offer.

How does a checking account differ from a savings account?

A checking account is a type of bank account where money is deposited and withdrawn as needed. This account is used for frequent, short-term transactions, including paying household bills or shopping. Although there are exceptions, a checking account typically does not earn interest, which may encourage usage frequency.

Checking accounts were historically drawn on through paper checks, where the check would be presented as payment instead of cash or a credit card. Paper checks are still available for checking account holders who prefer to mail in payments for goods and services. However, modern checking accounts are typically linked to a debit card or online payment portal so that payments can be processed electronically. When a paper check is used, it is usually scanned to process as an electronic bank transfer (EBT) transaction for increased speed and efficiency.

As you compare checking account options, decide if you will need paper checks or just a debit card. You should also decide if you intend to use this account for personal checking, or is it intended to be used for business expenses with a need for multiple signers? At Community First Credit Union, you are not limited to a certain number of checking or savings accounts, so there is complete flexibility depending on your needs.

How does a savings account differ from a checking account?

A savings account is a type of credit union account where money is deposited and left to grow over time. This account type is used to save up for infrequent, long-term transactions, such as:

  • Saving for college tuition
  • Saving for a new home or car down-payment
  • Saving for a rainy day or emergency fund
  • Saving for vacations or trips
  • Saving for retirement

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Savings accounts earn interest

A savings account typically earns interest on the deposited amount, encouraging account owners to leave funds untouched for extended periods of time so that this interest can continue to accumulate. Unlike checking accounts, there can be specific regulations that set a transaction limit on savings accounts per statement cycle. This promotes better saving habits and encourages less spending.

Savings accounts can provide overdraft protection

One major benefit of a savings account is the ability to link it to a checking account. Because checking accounts are designed to be used more frequently, there is sometimes a risk that they could be overdrawn. If that happens, a check or transaction can "bounce," which means the check or transaction cannot be paid because there are insufficient funds in the account to cover a purchase. The fees for bouncing a check can add up quickly, which can create difficulty for an account holder. However, if you link your savings account to your checking account, the funds in your savings account can be transferred to your checking account to cover any purchases you make. There may be a small fee associated with this automatic transfer, but this fee is generally much less than that fee for bouncing a check. Plus, you have the peace of mind that your purchases will be paid for.

Commonalities between checking and savings accounts

Checking and savings accounts are both types of bank accounts where money is deposited for future use. Although they are designed with specific reasons for use, they share several similarities:

  • The Federal Deposit Insurance Corporation (FDIC) insures balances held in both checking and savings accounts for up to $250,000 per account owner and ownership category.*
  • The NCUA is a federal agency that regulates credit unions and insures your money. This insurance guarantees you'll receive the money you're entitled to from your deposit accounts even if the credit union goes under.
  • Account owners can access checking and savings accounts through online/mobile banking applications, through convenient physical locations, and each can receive direct deposits from the account owner's employer
  • Checking and savings accounts both have low fees and are exclusively available to members of Community First Credit Union

What to consider when deciding which type of account to open

We recommend starting with a savings account, where you make an initial equity deposit to become a member of the credit union. Then, as you consider which type of account is right for you, think about how frequently you will need to access the funds in the account. Do you need to save or spend, and do you want the ability to earn interest on deposited funds? If the answers are to spend, with little need for earning interest, you will benefit by opening a checking account as well.

We'd love to help you get started. For assistance with opening your new savings account, checking account, or even to discuss additional options, call us today 904.354.8537.

*Please visit for more information about insurance limits. (

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