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Checking vs. savings accounts: what you should know

Banks offer different types of bank accounts. Find out the main differences between checking vs. savings accounts and how they work together.

8 min. read

Looking to open a bank account and wondering, “What’s a checking account vs. a savings account?” While these accounts can work together, they’re not the same. Checking and savings accounts can help you manage your money in the day-to-day and long-term. These two types of accounts are offered by banks or credit unions and can make sure you have funds to use for daily expenses, plus money set aside for the future. Let’s break down the difference between checking and savings accounts and what you should know.

What is a checking account?

A checking account serves as a type of hub for your money. Through your checking account, you can:

  • Deposit money, such as cash or your paycheck
  • Pay bills
  • Withdraw cash from an ATM using your debit card, which is associated with your checking account
  • Pay for items or purchases using your debit card, which connects to your checking account
  • Write a check for rent, a contractor, etc. — checks are connected to your checking account

Checking accounts are used in many day-to-day transactions, both for receiving and spending money. 

Different types of checking accounts    

If you open a checking account with a bank, there may be various checking account offerings to choose from with different benefits. BMO offers different types of checking accounts including:

  • BMO Smart Advantage Checking This is one of the most popular checking accounts and has no monthly maintenance fees or minimum balance requirements. footnote 1 A great option for consumers who want to avoid extra fees.
  • BMO Smart Money CheckingThis account offers customers $0 for overdraft fees and has a low monthly maintenance fee of $5. If you’ve paid more than your share in overdraft fees, this is a great banking option.
  • BMO Relationship CheckingWant to earn interest on your checking account and score surcharge fee rebates and unlimited non-BMO ATM transactions? This account is for you. You can also get added perks and debit card protection. You can avoid paying the $25 monthly maintenance fee if certain conditions are met. This checking account is a great option for those who want more robust protections and earnings on their deposits.      

What is a savings account?

A savings account, including an entry level savings account or a money market account, is a place to put money away for the future. For example, a savings account can be used for an emergency fund, rainy day fund, or toward your long-term financial goals (such as a vacation or a down payment on a home or car). 

While a checking account is more for daily transactions (e.g. your electric bill), a savings account acts as a reserve for funds for future use. Through your savings account, you can:

  • Set aside a portion of your paycheck for emergencies
  • Have an account with funds allocated for that dream trip 
  • Have a buffer of cash for unexpected and major life events
  • Transfer funds from your checking account into your savings account, and vice-versa

Savings accounts are intended for saving (as the name suggests!) and are geared for more medium and long-term planning. 

Different types of savings accounts      

On top of checking account options, banks may offer different types of savings accounts, as well, with unique benefits. BMO offers the following savings accounts:

  • Savings Builder. The most popular account offers no monthly maintenance fee and rewards savers with $5 for each month you grow your balance by $200 or more for the first year. footnote 2 If you need a push to start saving, this option can help you reach your savings goals.
  • Relationship Plus Money Market. Using this account, you can earn interest on your deposits and get the most out of your savings. There’s a small $10 monthly maintenance fee, which can be waived if you have $5,000 in your account.  

Alternative savings products     

In general, you can use a checking account and savings account to help manage your money today and save for tomorrow. But aside from these traditional options offered by banks, there are other savings products to consider as well, including:

  • Certificates of Deposits (CDs). Want to earn more in the short term on your savings deposits? A Certificate of Deposit (CD) can help you lock in a great interest rate and grow your money. footnote 3 This account is different from a savings account, as it can offer higher interest rates based on the term you select, and you can only access your funds once your account matures. BMO offers CDs starting at $1,000 minimum balance with terms as short as three months or as long as five years. If you don’t need to touch your money for a few years, you can get higher rates and earn more, making this a great savings vehicle for users who want to maximize their money. 

What is the difference between a checking and savings account?

The main difference between a checking and a savings account is that your checking account is used for spending and deposits in the day-to-day, while your savings account is for long-term saving, such as for emergencies. So, if you’re wondering, “What’s the difference between checking and savings?” it comes down to how the funds are used in each account. A checking account is where you can manage income and expenses and make deposits and withdrawals. A savings account is where you can put money aside for bigger goals and create a cushion for life’s unexpected events. 

The difference between a checking and savings account is also illustrated in their features. 

 Checking account features:                

  • Used for spending or receiving funds    
  • May be used for writing a check, paying with a debit card, wire transfers, a money order, or ACH transfers
  • Mobile app and online account access
  • May or may not earn any interest
  • There may be minimum balance requirements
  • Could have a monthly maintenance fee if the account balance is below a certain amount
  • May have overdraft fees if you overdraw the account and spend more than what’s in the account
  • There may be ATM fees if you withdraw cash from an out-of-network ATM
  • Bill payments or electronic transfers between accounts or to another individual using Zelle®
  • Mobile check deposit on your smartphone using the bank’s mobile app 

 Savings account features:

  • Used for receiving funds and saving money for the future
  • Mobile app and online account access
  • Earns interest, which depends on the Annual Percentage Yield (APY); Money Market accounts will usually pay a higher rate of interest
  • There may be minimum balance requirements
  • Could have a monthly maintenance fee if the account balance is below a certain amount
  • May have a limit of six transfers or withdrawals per month
  • May have a fee if you go over six transfers or withdrawals per month
“If you’re wondering, “What’s the difference between checking and savings?” it comes down to how the funds are used in each account.”

Are checking and savings accounts FDIC insured?

Both checking accounts and savings accounts held by consumers are insured by the Federal Deposit Insurance Corporation (FDIC). Generally, these accounts are insured for up to $250,000.

When would I pay fees on a checking or savings account?

Depending on your bank and type of account, you may have to pay fees associated with a checking or savings account. Some of these fees may include a monthly maintenance fee, overdraft fee, paper statement fee or ATM fees.

Do checking and savings accounts pay interest?   

Checking accounts and savings accounts may both earn interest. However, it depends on the financial institution and type of account. Some banks may not pay interest for checking accounts but may offer a higher rate for savings accounts.

Using a checking and savings account

Now that you know the difference between a checking and savings account, you can consider opening these accounts with a bank.

Though each account is different, they each serve an important purpose — so opt for both checking and savings accounts to help you manage your money coming in, money going out, and the money you’re setting aside for the future.

Before opening an account, check out account fees, minimum balance requirements, the interest rate (which can change over time), overdraft fees, mobile app functionality and customer service. Your money reflects your hard work, so you want a bank that makes the process of managing your finances seamless.

Ready to open a checking or savings account?

bmo smart advantage checkingSavings Builder


Accounts are subject to approval and are provided in the United States by BMO Bank N.A. Member FDIC.Zelle® and the Zelle® related marks are wholly owned by Early Warning Services, LLC and are used herein under license. Footnote 1 details Accounts with zero balance may be closed.

Footnote 2 details Conditions apply. Review the Savings Builder product disclosure.

Footnote 3 details Early withdrawal penalties may apply.