When it comes to bank accounts, there are lots of things that can be confusing. I’ve been asked a lot of questions about bank accounts over the years and thought it would be good to answer many of the most common questions here.
What is the difference between a savings account and checking account?
A savings account is intended for money to build up in. Often, it will have a higher interest rate and it will have a 6 transaction limit for the statement cycle. Additionally, you will not get checks for a savings account, only for checking accounts and money market accounts.
What is the difference between a savings account and a money market account?
The primary difference is that you can write checks from a money market account, but it is still subject to the 6 transaction limit. Additionally, money market accounts generally have higher interest rates but also have higher required minimum deposits.
Why do savings accounts and money market accounts have a 6 transaction limit?
This is due to Federal Reserve regulations. More specifically regulation D is what limits banks to 6 transactions.
What is the purpose of a savings account?
A savings account is a low-risk way to accrue money towards your savings goals. It is also intended to be a very liquid asset so you have access to your money as needed.
Does a savings account have a routing number?
Yes- kind of. Your bank has a routing number. That number will be the same for all of your accounts at that bank as well as all other customers that use that bank. In addition to the routing number of your bank, your savings account will have a separate and different account number.
Is the routing number the same for a checking and savings account?
If they are at the same bank, then yes. Routing numbers are specific to the bank that the accounts are held at. That means all customers that use the same bank use the same routing number. If you have a checking account and savings account with the same bank, then they will both have the same routing number.
Can you get direct deposit into a savings account?
Yes, you can.
Can you write checks from a savings account?
No. Checks are issued for checking accounts and money market accounts only. There may be limited situations where a bank might do this, but generally the answer is no.
Can you overdraft a savings account?
This will depend on your bank, but generally, it is possible. If you have something pulling money out of the savings account and your bank honors the amount above what you have in there, then yes, it will overdraft resulting in NSF fees (Non-sufficient Funds).
Does a debit card draft from savings or checking?
Debit cards when used at a store draft from your checking account. At an ATM, you’ll have access to both your checking and savings account, so the money will then be taken from whichever account you choose at the ATM.
How do you transfer money from savings to checking?
This will vary from bank-to-bank, but generally you should be able to transfer money through their website, phone app, or over the phone with their customer service.
Can you pay bills with a savings account?
Yes, you can, but you should avoid it. Federal Reserve Board regulation D limits banks to only allowing 6 withdrawals from a savings account each statement cycle. Anything above those 6 transactions will result in a costly fee for each transaction. If you want to pay bills with your bank account, make sure you have a checking account which doesn’t have a transaction limit.
Can you buy stuff online with a savings account?
Yes, you can if the website allows you to input banking information, but you should avoid it. Federal Law limits banks to only allowing 6 withdrawals from a savings account each statement cycle. Anything above those 6 transactions will result in a costly fee for each transaction. If you want to shop online with your bank account, make sure you have a debit card that is tied to a checking account or a credit card. Many people prefer shopping online with a credit card so the money in their checking account isn’t stolen in the event of fraud.
Can a minor open a savings account?
Only if accompanied by an adult. The adult will need to be on the account in addition to the minor.
If you have any other questions about savings accounts that aren’t answered here, then just use the contact form and send your question over.