Overview
- Checking accounts are built for frequent, everyday transactions, such as debit card purchases, bill payments and direct deposit.
- Savings accounts are designed to earn interest on money you are setting aside for an emergency fund, a savings goal or idle cash you want working harder.
- High-yield savings accounts at online banks typically pay significantly more than traditional savings accounts, often several times the FDIC national average.
- Many clients keep checking and savings accounts at different institutions so they have an account for everyday spending at one and money they want to set aside and earn interest on at the other.
A checking account is built for everyday spending: it gives you fast access to your money through a debit card, checks and online payments. A savings account is built for accumulating money over time: it typically earns interest and is designed to hold funds you do not need on a daily basis. Most people benefit from having both: a checking account for regular transactions and a savings account for building a balance that earns a return. Understanding the difference between the two helps you use each one the way it was designed to be used.
EverBank offers both options: the EverBank Performance® Savings account and EverBank Performance® Checking account. Understanding the difference between savings and checking accounts helps you use each one the way it was designed to be used.
What is a checking account?
A checking account is a deposit account designed for high-frequency, everyday use. It may give you direct access to your money through a debit card, personal checks, online bill pay and/or electronic transfers. Most checking accounts also support direct deposit, meaning your paycheck can be deposited automatically.
However, checking accounts often offer little or no interest because they are built for efficient everyday transactions rather than growth. The defining feature of a checking account is convenient access to your funds, subject to the financial institution’s terms and transaction limits.
What to look for in a checking account
- No monthly maintenance fee
- No overdraft fees
- Debit card with wide acceptance
- ATM fee reimbursements, particularly useful if you frequently use out-of-network ATMs
- Mobile check deposit and online bill pay
What is a savings account?
A savings account is a deposit account designed for holding money you do not need for everyday spending and earning interest. Your balance earns an annual percentage yield (APY), which is often compounded daily but can be based on a different schedule. While most savings accounts allow you to transfer out your money, they are not intended for day-to-day transactions in the way a checking account is.
Traditional savings accounts at large national banks often offer low APYs, in many cases well below 1.00%; according to FDIC data, the national average rate on savings deposits is 0.38%.x However, high-yield savings accounts (HYSAs) often pay several times the FDIC national average for savings deposits.
What to look for in a savings account
- Competitive APY: several times above the FDIC national average
- No monthly maintenance fee
- No minimum balance requirement
- Interest compounded daily
- FDIC insurancex
- Mobile and online access
Checking account vs. savings account: key differences
Checking and savings accounts serve different financial purposes, and knowing the key differences can help you make the most of your money.
| Checking account | Savings account | |
|---|---|---|
| Primary purpose | Everyday transactions and spending | Accumulating funds and earning interest |
| Interest | Often none or a lower APY than savings accounts | Competitive APY |
| Access | Debit card, checks, ATM, bill pay (varies by account/bank) | Electronic transfers; no debit card or ATM access in many cases |
| Transaction limits | Potential transfer, ATM, and debit card limits | Potential withdrawal limits |
| Typical minimum to open | Low (often $0-$100) | Often $0 at online banks |
| Best for | Daily expenses, bill payments, paycheck deposits | Emergency fund, goal saving, idle cash |
Do you need both a checking and a savings account?
Many people need both since the two accounts serve distinct purposes that rarely overlap.
Using a checking account for savings may lead to accidentally spending what you had intended to set aside, possibly with little or no interest to show for it. Using a savings account as a primary spending account may also create friction due to potentially slow transfers, limited access options, and a design that’s not suited for frequent transactions.
A common approach is to keep funds separate, with a checking account for money you need to spend in the near term and a savings account for money you want to grow.
Can a checking account earn interest?
Some checking accounts do earn interest, often called interest-bearing or high-yield checking accounts. The yields are often lower than what dedicated high-yield savings accounts offer, and they may come with conditions such as a minimum balance requirement or a minimum number of monthly debit card transactions.
An interest-bearing checking account can serve clients who want some yield on their everyday balance without maintaining a separate savings account. However, if yield is your primary goal, a dedicated high-yield savings account will often outperform a checking account based on APY for the same balance held.
EverBank accounts: matching the right product to the right purpose
EverBank offers both savings and checking products, each built for a distinct function.
For savings, the EverBank Performance Savings account is the primary recommendation for clients prioritizing yield. It offers a 3.90% APYx for new accounts with $0 to open, no monthly maintenance fee, no minimum balance requirement, and daily compounding. It’s also available to open online nationally.
For everyday banking, the EverBank Performance Checking account features no monthly maintenance fee, no overdraft fees, and ATM fee reimbursements for clients who use out-of-network machines (unlimited ATM fee reimbursements with balances of $5,000 or more and up to $15 per month for smaller balances).x Additionally, this checking account requires $100 to open and offers a 0.25% APY with balances of $100,000 and up, 0.25% for $50,000 to $99,999.99, 0.25% for $25,000 to $49,999.99, 0.25% for $10,000 to $24,999.99, and 0.25% for balances under $10,000.x
Both EverBank Performance products are FDIC-insured.x To compare account options, view EverBank's current rates.
FAQs: checking vs. savings account
What is the difference between checking and savings accounts?
A checking account is designed for everyday transactions, such as debit card purchases, bill payments and direct deposit. It prioritizes speed and access over earnings. A savings account is designed to hold and grow funds over time, earning interest on your balance. Many savings accounts do not include a debit card, and they are not built for frequent spending.
Can I use a savings account like a checking account?
You can transfer funds from a savings account to pay for things, but the account is not designed for frequent transactions and may not include a debit card or check-writing capability. High-yield savings accounts are most effective when used for holding balances you do not need immediate, daily access to. For transactional needs, a checking account is the more appropriate tool.
Do savings accounts have transaction limits?
Some savings accounts limit the number of transfers per month, historically tied to Regulation D, which has since been amended. However, institutions may still set transfer or withdrawal limits, so check your account terms for any applicable limits. Many high-yield savings accounts at online banks allow standard transfers; very high-volume transactions are better served by a checking account.
Should I keep my checking account and savings accounts at the same bank?
Not necessarily. Keeping them at the same institution can make transfers convenient, but many savers hold savings accounts at online banks specifically to access higher APYs that large traditional banks might not offer on their savings products. Some clients may find the small delay on inter-bank transfers worth the yield advantage. If your checking account is at a big bank paying minimal interest on savings, a standalone HYSA at an online institution may be a better fit for that portion of your balance.
How much should I keep in a checking account vs. a savings account?
A common approach is to keep one to two months of regular expenses in a checking account—enough to cover bills, spending and a small buffer—and build a savings account balance separately. A common rule of thumb for an emergency fund is to hold three to six months of expenses in an accessible savings account, though the appropriate amount can depend on the client. Beyond the emergency fund, additional funds can be allocated to a CD or other savings vehicle depending on your timeline and rate goals.
Related terms
- Annual percentage yield (APY): The total rate earned on a deposit account in one year, expressed as a percentage and accounting for compound interest.
- Direct deposit: An electronic payment that transfers funds directly to a bank account, commonly used for paycheck deposits.
- FDIC insurance: Protection provided by the Federal Deposit Insurance Corporation covering deposits up to $250,000 per depositor, per insured bank, per ownership category.
- High-yield savings account (HYSA): A savings account that typically pays a significantly higher APY than the national average for a traditional savings account, typically offered by online banks and digital-first institutions.
- Overdraft fee: A charge levied by a bank when a transaction causes an account balance to fall below zero.
- ATM fee reimbursement: A bank policy of refunding fees charged by third-party ATM operators when a client uses an out-of-network machine.
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