Checking Accouts and Savings Accounts

The difference between checking & savings accounts are quite a few minor details. Starting with the obvious, the names, checking and savings have different meanings and different intents. Another name for checking is transactional, or demand deposits. Savings accounts are intended to help you accumulate funds over time. They’re also called time deposit or term deposit accounts.

Depending on the bank, transactional records of finance vary. For the sake of convenience and safety, you can use personal checks to pay your bills rather than paying by cash. All financial institutions now offer plastic cards that you can use to deposit or withdraw funds at the bank’s ATMs.

Checking, or transactional accounts usually allow for unlimited withdrawals, whether by check or atm. Sometimes people have extra money. They do not want to lose it or have it stolen. If you deposit it in a savings account, or time deposit account, it will be safe and it will usually accumulate interest, depending on the account you have chosen.

Transactional allow customers to deposit, withdraw, and transfer their money whenever they want to do so. Someone who puts money into a transactional account receives blank forms called checks. In order to give funds to another person, you simply fill out a check against your account and sign it. The check can be given to the recipient, or even sent in the mail, since it’s safer than cash.

The payee can cash the check to get the money or deposit the check in a bank. The funds are deducted from your account and deposited into the payee’s account, or if he goes directly to your bank, handed to him in the form of cash. A check is not money itself. It is simply and order to the bank to pay money.

Banks and credit unions prepare monthly statements for checking account customers. Each and every transaction should be reflected in the statement so the customer can see what monies have been deposited and withdrawn from their account over the month. Customers who keep their own records can compare their figures with those of the bank. Because of the number of transactions involved, checking accounts require a great deal of bookkeeping.

Banks pay interest on money kept in time deposits. The amount of interest paid depends on the type of account. Some accounts earn three percent interest a year. Others may earn five percent or more. The Federal Reserve Board sets their rate, which in turn is used by banks to determine interest rates on savings accounts. Most bank offer special kids savings accounts to get children started saving.

Historically when you opened a savings account, you received a passbook to record all your transactions in. For that reason such accounts are still referred to as passbook accounts. You could only withdraw funds by going to the bank with the actual physical passbook, proving that you were the owner of the account and there were funds available.

Now that everything is electronic, even savings accounts can be accessed using a plastic bank card at the ATM. But unlike checking accounts, frequent withdrawals will cost you in bank fees. There are record finances that can be joined with another individual allowing that person to withdraw as well.

Because savings accounts are time deposits, banks can require thirty days notice before the money is taken out. But in practice, money in a time deposit can be withdrawn on demand.

Both types of record finances are good, it all depends on whether it is wanted for keeping money and having it grow throughout the year, or having quick access to the money when it is needed.