Savings accounts with higher interest rates tend to be offered by banks;

however, they are not linked to checking accounts–checking account transaction fees would make it impractical for people to keep large amounts of money in these bank accounts.

Yes, you can use a checking account as a savings account.

This is because you can link this type of bank account to your primary checking account and essentially treat it like a savings account.

There are many ways that people utilize bank accounts. You would do well to understand how they function before using them. Can you use a checking account as a savings account? Can I use my checking account as a savings vehicle? Can you have one without the other, or vice versa? Those are all excellent questions with pretty simple answers. Checking and savings accounts serve two different purposes but can be linked together in most instances. When each purpose is understood, it becomes easy to determine if they can work together individually.

The basics of saving

Before learning if it is possible to use a checking account as a savings vehicle, some basics must be established. First and foremost, a savings account is where your excess cash goes after it has been earned. This money will then sit in your account for an extended period while it accumulates interest.

In the simplest possible terms, this means you deposit some amount of money into the bank regularly so that it builds up over time. It operates much like compound interest but usually at a lower rate. Most banks offer some interest rate to clients who maintain large balances in their accounts or have other special features available to them. Therefore, maximizing each dollar’s value becomes advantageous shortly after being deposited into the account. The basics of checking

On the other hand, checking accounts are designed to be used quickly. You can access the money in your checking account by writing a check or using an ATM card. A checking account is not meant for holding onto cash for extended periods like a savings account. Often there is no interest rate associated with these transactions because they are supposed to be completed expeditiously. Although it is possible, you would generally want to maintain separate accounts due to the different fees and purposes each serves.

Even though some banks offer special rates on their deposit products, most consumers go with the best interest-bearing account they can find. This is especially true for separate checking and savings accounts, where you may be better off with two different institutions if the rates offered are significantly different from one another.

Keeping the two types of accounts separate allows consumers to maximize each dollar’s earning potential, but there is one way in which they can work together. When an individual has multiple accounts at the same institution, the bank may link them together. This allows them to transfer funds, which saves the hassle of transferring money via paper check or an ATM card.

Additionally, it may make drawing interest off your combined balances more efficient because overdraft fees are less likely to be charged if you maintain large amounts in both accounts.

Let’s do some quick math.

One of the easiest ways to see if it makes sense to combine multiple accounts is by simply looking at the interest rates of each offer. For example, let’s suppose your local credit union offers an interest rate of 1.7% for its savings accounts and 10% APY on its money market accounts.

A checking account is designed to be used as a primary way of storing your money, while savings accounts are meant for the long term. Checking accounts have higher limits and generally offer better interest rates than many savings accounts. You can use them both interchangeably if you want an easy place to store your cash that’s accessible immediately when needed versus saving it in more traditional methods like CDs or bonds.

Differences between the Banks and Credit Unions

Over a period, the differences between the banks and the credit unions have reduced. However, there are still many profound differences that may impact your choice and judgment.

Ownership: the Credit Unions are nonprofit organizations and are found to focus more on the needs of the members. Banks on the other hand are for-profit organizations. That is why the banks have higher fees when compared to the credit unions.

Interest rate: Banks are also required to make money for the people who invest in them. Therefore, they have a low-interest rate on the savings account. Banks also charge high-interest rates on the loans they provide. However, credit unions charge a low-interest rate on the loans and provide higher interest rates on the savings account as they work in the interest of their members.

Membership: opening a financial and saving account is easy at a bank. However, you can only have a savings account at a Credit Union when you can qualify for the membership. Even if you have a good amount of cash and money with you, a credit union will only give you membership when you possess the eligibility qualifications.

Safety and Insurance: Your money in a bank is insured against theft or loss by FDIC (Federal Deposit Insurance Corporation). The NCUSIF (National Credit Union Share Insurance Fund) provides such insurance for the credit unions and the money they have. These are the Agencies that also have government backing. However, you should ensure that your bank or credit union has the necessary insurance cover before you put your money in it.

Online Banks

One can easily say that saving money in the credit unions can be a better proposition as it would provide better and higher financial returns. However now we also have online banks that are gaining popularity increasingly. Online banks are run and operated solely on the internet. Because these banks do not have any infrastructure, for instance, parking lots or buildings, they can offer their services at much lower fees. The online bank also offers better interest rates on loans and savings when compared to their physical and brick-and-mortar counterparts.

Benefits of Credit Union

Credit unions may offer a plethora of benefits to their members. Some of the important benefits include:

• More personalized service for the customers.
• Free financial education coaching and counseling for the members and the availability of financial literacy resources.
• Free of cost checking accounts that do not have any minimum balance requirement.
• Good interest rates on saving accounts and lower fees.
• Available in the local communities.
• More flexibility for attending to the needs of the customers. There have been instances when large banks have provided bad customer service.

Benefits of Bank

Banks may also offer certain unique benefits including:

• Modern and better technology in the form of online apps (for smartphones), the latest website features, and other digital tools.
• Availability at the more convenient locations and better speed and convenience in the transactions accomplished.
• More products and services.
• A large ATM network that is available to the customers free of cost.

Conclusion

In the majority of cases, saving money in the Credit Unions can be a better option as these unions charge lesser or no fee for account opening and also offer good interest rates for the members on loans and savings accounts. However, you would also like to consider the online banks that may offer better financial benefits and good interest rates. Whether it is a Credit Union or a Bank, your money is equally safe in either of these places as it is fully insured by agencies that are backed and supported directly by the government. However, while interest rate and loan repayment rates are important for financial reasons and cost-effectiveness, many people are also looking for certain features when they want to have a savings account. For instance, having access to a wide ATM network may be a priority for many. Therefore, when choosing between a Bank and a Credit Union for a savings account, you need to evaluate the features that you want and make a decision based on them.

Even during a downturn, having a high-yield account can let you preserve for future requirements. You should not wait for better times if you have the funds available now.

Because of the internet’s strength, it’s never been quicker to start an account. A quick Google search can yield dozens of possibilities from online and traditional banks. These institutions provide limited discounts or bonus payments if you create a savings account.

What’s the Difference Between High-Yield Bank Accounts and Regular Savings Accounts?

A high-yield account will offer you 20 – 25 percent more than the average for a conventional account. Most have often kept the savings bank at the same institution as the current account, allowing transactions between these two simple and rapid.

However, with the emergence of internet-only banking and established banks that have extended the doors to people across the nation via online account registration, the savings rate has exploded. Many banks have different interest rates, providing you an opportunity to invest in their banks.

What to Consider When Choosing a High-Yield Savings Account

Regular vs. Online Bank Accounts

Have a check at your possibilities online before going to the local bank to establish a high-yield bank account.

A Savings account at digital banks often provides far greater interest returns than savings at traditional banks. They don’t need to spend as much in overhead because they don’t need to run actual locations. Online banks may carry on the savings to the users in the shape of better interest rates due to lower operating costs.

Money Is Available in a Variety of Ways

High-yield savings, despite their low APYs, are a fantastic way to establish emergency savings. However, there is a limit. By legislation, you can only make six transactions each month from any account. If you exceed your monthly restriction, you’ll be charged a lot of money.

If you need more frequent access to cash, an interest-bearing bank account can be a better option.

Interest Rates Are Higher Than Typical

The rate of money you receive per year is determined by the rate of interest on the savings account, often called APY. Your funds will increase faster if the APY is higher.

When looking for a savings account, look for one with an annual percentage yield (APY) higher than the normal 0.05 percent earned in a savings account. Remember that the APYs advertised by a savings account is changeable, which means they can change at any time based on the economy’s stability.

There Are No Bank Charges

Finding a cheap bank account is necessary since you shouldn’t want to spend to maintain your cash in one. When you accept the papers, read the contract, and any small print, to ensure that you are joining a savings account with no hidden fees.

Many banks remove charges but ask you to pay a minimum balance to set up an account or begin earning income. If you don’t keep a minimum deposit in the accounts, other institutions can charge you a recurring monthly price.

How Do I Open One?

If you’re fortunate enough to get a competing bank account at the present bank, switching will be simple. Because you will have previously been authenticated with the bank, it will most likely be feasible through the internet banking login with little requirement to submit personal information.

If you’re creating a bank account at a new bank, the method will be a little more extensive, but nothing will be too tough. You’ll need to take out fifteen minutes or more whenever you can complete the digital application on the laptop because most high-yield accounts can be created digitally. To make the registration process go more smoothly, have the driver’s license, SSN, and bank account details available.

Final Thoughts

A high-yield bank account can be a good compromise for the money, providing principal protection, the security of federal coverage, and a larger income than a standard savings account but less than you can make from speculative investments. Consider how high-yield accounts may better represent your financial objectives and circumstances.

Then do some research to discover accounts that will optimize the earnings while avoiding fees and imposing constraints that don’t meet your demands.

Mint

Cost: Free

Stashing some money in a savings account is great, but if you don’t have a handle on your overall financial health, then it can be ineffective, or worse, lead to overdraft fees. Mint is a fantastic budgeting app precisely because it is automated. The secure app automatically analyzes all your accounts and tracks, categorizes, and analyzes each of your transactions. With this information, Mint creates a budget unique to your situation. Mint also allows you to set goals and automatically have money transferred for those aims.

Qapital

Cost: Free

Qapital calls itself a “goal-based banking service.” You set up a series of rules; for instance, round credit/debit purchases to the nearest dollar, or deposit money into savings each time you rent a movie or set aside a certain amount each time you get paid. Then the app automatically moves the money into an FDIC-backed Qapital account. There are some big advantages to this approach. The first is that the money goes into a savings account separate from your other accounts, so you are more likely to forget that the money is there until you need it. Secondly, it lets you set up an automatic-savings plan unique to your situation. Some accounts even earn interest.

Ifttt

Cost: Free

Ifttt is not technically a savings app in and of itself. The app works by allowing you to set a series of conditional statements to adjust the behavior of everything from your phone to your Facebook account. That said, some of the apps that it connects to are banks or savings apps like Qapital. For instance, searching for Qapital shows pre-created rules like “save money when you hit your FitBit step goal,” or “save money when you don’t meet your FitBit goal,” and “save money every time it snows,” along with many other similar rules. It’s an easy and fun way to put aside a little extra money.

Acorns

Cost: $1 per month for balances under $5,000; 0.25% per month for balances over $5,000; free for four years for college students

Acorns is the only app on this list that isn’t technically free, but it pays for itself so quickly that it might as well be. Acorns is an automated savings app that rounds your purchases to the nearest dollar, like with Qapital or similar apps. However, unlike those, Acorns deposits the money into an investment portfolio comprised of Exchange Trading Funds. If your stocks rise, then like with any other investment account, you reap the reward. Even better: if you use your credit card with one of the partner apps, they’ll automatically deposit money into your investment account.

Saving money doesn’t have to be a hassle. With apps like there, there’s no reason it should be anymore. Why not try one of these apps today and watch your savings grow for a vacation, nest egg, retirement, or a chance to spoil yourself.