With the many different types of bank accounts out there, it can be difficult to know which to choose. Checking accounts and savings accounts are two simple tools that can help you take charge of your money. Understanding the differences between them and how they’re used can make a big impact when managing your personal finances.
What is a Savings Account?
A savings account might evoke the image of a ceramic piggybank, and that’s for good reason! Think of a savings account as a safe place to store your hard-earned money. Savings accounts usually accrue interest, providing easy and hands-off growth of your balance over time.
TwinStar Credit Union has several different types of savings accounts with competitive interest rates. Whether you’re searching for a basic savings account for you or your child, or other personal savings accounts like an Individual Retirement Account, Money Market Account, or Certificate of Deposit — all of our offerings are structured to support the same goal: stowing away money for a later date.
What is a Checking Account?
A checking account is designed to support spending, providing a convenient alternative to carrying cash. Debit cards and/or paper checks are linked to a checking account; when you swipe your debit card to order takeout or write a check to pay a bill, the expenses come directly out of your checking account. Because these accounts are often used for day-to-day transactions, they typically offer little-to-no interest earned.
Your hard-earned money should work for you, which is why TwinStar has both basic and rewards-based checking account options to support your needs.
Key Differences between a Checking Account and Savings Account
Each account type has unique benefits, which is why pairing them together provides the best of both worlds and increased flexibility.
Checking:
Purpose
Transactional, everyday expenses.
Money needed now.Interest
No interest/minimal interest accrued on balances.Safety
Deposits are federally insured by the National Credit Union Association (up to $250,000).Benefits
More convenient and safer than carrying cash.
Easy, quick access to the money in the account.
Free tools to help you manage life’s expenses: online banking and online bill pay.
Rewards and cash back opportunities—like TwinStar’s Kasasa Cash Back or Kasasa Cash checking accounts.Drawbacks
Accrue minimal, if any, interest.
Can have fees: Overdraft fees, non-sufficient funds fees, etc.
Sometimes have minimum balance requirements.
Savings:
Purpose
Planning for an upcoming purchase, emergency fund, or rainy day.
Money needed in the future.Interest
Higher interest rates depending on the type of savings account.Safety
Deposits are federally insured by the National Credit Union Association (up to $250,000).Benefits
Often higher interest rates so your balance grows faster over time.
Unlike investments, savings accounts don’t lose money; what you’ve saved is there when you need it.
Options to link a savings account for overdraft protection on a related checking account, minimizing fees.Drawbacks
Less access: Transfer money out of the account and/or visit an ATM or financial institution to access the funds.
Can have monthly limits on the number of withdrawals.
When to choose a Savings Account
Money that you don’t have an immediate need for is best placed in a savings account. A steady account balance and higher interest rate allow your money to grow at a faster rate than a checking account would.
When a Checking Account makes more sense
Checking accounts offer unlimited transactions and are best suited for when you need regular, quick access to your money. They also often offer free services, like online banking and bill pay, to help you pay bills and manage daily expenses more efficiently.
How do I open a checking and/or savings account?
TwinStar offers a variety of checking and savings accounts to support our Members’ immediate needs and future dreams. Simply choose the TwinStar checking account or a savings account that’s right for you. Then apply online, call us at 800.258.3115, or stop by any of our neighborhood branches today to open your account(s) and manage your money in a meaningful way.