Difference Between Checking and Savings Account
04 Aug 2021

Difference Between Checking and Savings Account

Know the difference between Checking and Savings Accounts in this article

Key Takeaways

  • Checking and Savings Accounts are two of the most common products offered by banks but they differ in many ways
  • Checking Accounts yield little to no interest, whereas you earn interest on savings accounts.
  • There are no limitations on withdrawing or depositing cash in Checking Accounts, but there may be limitations on cash withdrawals in Savings Accounts
  • The frequency of transactions on Checking vs Savings Accounts also differs
  • You have to maintain higher balances in Checking Accounts, whereas those in Savings Accounts are considerably lower.

There are several types of accounts you can choose from, including a Savings Account and a Checking Account. The most notable distinction between the two accounts are the purpose of operations and the ease of accessing money. A Savings Account is typically meant for personal use, where you can park your earnings and earn interest on deposits. However, a Checking Account allows you to make multiple cash and cheque deposits and withdrawals every day, and is ideal for business transactions. Keep reading to know more about Checking and Savings Accounts and how they differ.

What is Checking Account?

A Checking Account is a type of bank account that is used for everyday expenses. These accounts are easy to access and have no limitations on withdrawal associated with it. You can use the account to make bill payments, pay for online purchases, and conduct other everyday transactions. The bank provides you with a Debit Card, cheque book and passbook when you open this account. You also get online and mobile banking services to access your money at anytime from anywhere. However, checking accounts do not yield much interest gains for account holders.

What is Savings Account?

A Savings Account is one that helps you save money and grow your capital by depositing money in it regularly. It is a place where you can park the money you do not need right away. Unlike checking accounts, Savings Accounts come with a few restrictions on usage. For instance, you may withdraw funds at banks and ATMs only a certain number of times each month. Like Checking Accounts, you get a debit card, passbook, cheque book and internet banking facilities with your Savings Account. However, unlike the Checking Account, you also earn a semi-annual or annual interest payout on the funds deposited in the Savings Account.

Difference Between Checking and Savings Account

Understanding the difference between Checkings and Savings Account is crucial before opening either account.

  1. Account Fees

    Banks charge you a fee for most transactions carried out through your Checking Account – ATM fee, overdraft protection fee, overdraft fee, online access fees, etc. On the other hand, a Savings Account is almost free from any kind of fee. The only time a bank will charge you a fee is if you exceed the money withdrawal limit or fail to fulfil the minimum balance requirements set by the bank.

  2. Frequency of Transactions

    If you have a Checking Account, you are required to carry out at least one transaction each month. If you fail to do so, your bank will levy a monthly maintenance fee. As for Savings Accounts, you can carry out a transaction once every six months to keep your account active. If there is no activity on your account (and the debit card provided with it), the bank will treat it as dormant.

  3. Frequency of Usage

    You can deposit and withdraw money from your Checking Account as often as you like. You may even carry out multiple transactions per day, as there is no upper limit on deposits and withdrawals. However, with Savings Accounts, there are certain restrictions on the number of times you can withdraw money at banks and ATMs. You also have to pay additional charges for using other bank ATMs if you exceed the 3-5 permitted transactions each month.

  4. Interest Payout

    The interest rate offered is the most significant difference between the Checkings and Savings Account. Banks usually provide little to no interest on Checking Accounts. With Savings Accounts, you earn interest on your deposits. The interest rate differs from bank to bank and largely depends upon the type of Savings Account you open and the sums you deposit in it.

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How to choose the best Checking and Savings Account?

Having explained the difference between Checking and Savings Accounts, let us look at the factors you should consider while opening these Accounts. Here is what you should do to should choose the best account.

  1. Check the interest rates.

    Consider the interest rate offered by the bank on both Checking vs Savings Accounts. Typically, PSU banks offer lower interest rates with annual interest payout, whereas private sector banks offer slightly higher interest rates with semi-annual interest payout.

  2. Check the minimum balance requirement.

    All banks have different minimum balance requirements on checking vs savings accounts. You generally have to maintain higher balances in your Checking Accounts, whereas Savings Account balances can range from INR 500 to INR 100,000 depending on the account type.

  3. Check the presence and platforms of banks offering the accounts.

    Ensure your bank has a significant presence, not only in your city and country but also internationally. A good bank is one that also provides multiple platforms to enable you to access your funds, from internet, mobile and SMS banking services to the number of ATM centres, ease of customer care helplines, designated relationship managers, etc.


Now that you know what is the difference between Checking and Savings Accounts, you can open your preferred account. The ultimate decision of enrolling for any of the two accounts depends mainly on your needs and what you hope to get out of the account. There is no rule that says that you cannot open both accounts. Like with every crucial life decision, remember to assess the pros and cons of both accounts before choosing one for your banking needs.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.