When you enter financial life, you immediately get connected to money transfers. You must understand the types of accounts and how they work. If you are planning to move to Canada for whatever reason, the first thing to do as soon as you get off the flight is to set up a bank account. You may want to determine which bank account suits Indian expats in Canada. It is easy to understand the difference between checking and savings accounts. The main difference between the two accounts is in terms of access to money and interest. A checking account gives you quick access to your funds, while savings accounts have withdrawal limits.
But the real question is, what type of bank account do you want to open? Do you want to open a savings account for a bigger purpose? Or do you want to open a checking account to access your funds quickly? Or do you need them both? If you are still deciding whether to open savings or a checking account, this blog might help you. Both types of accounts have their pros, cons and purposes, which will be discussed in the article.
What is a checking account?
A checking account is the account of daily usage. It gives your money a secure home agile. You can always deposit money from your account. There is no transaction limit for checking accounts. You can pay for your expenses using a checking account.
It is typically done from a checking account when you buy stuff from the grocery store and pay your bills and payments. Money is withdrawn from the account if you use checks.
Advantages of having a checking account
You cannot run your everyday financial life if you do not have a checking account. There are multiple times in a day when you use a checking account. Quick access and security to your funds make checking accounts easy to use and a basic need. The benefits of having a checking account include the following:
- All your deposits are FDIC insured (but they have the insurance limit)
- You can access your funds through an ATM card, checks and cashback at a register
- There are no transaction limits. You can get your cash in hand whenever you want and pay unlimited bills
- You can also pay your bills online and do online money transfers using the mobile app
- You have access to transaction history. You are informed about where your funds are going
- It gives you access to digital money management tools
As it is easy to do transactions with a checking account, you should keep in mind that it may be age-restricted. Most banks do not allow people under 18 to open checking accounts without legal permission. In case of urgency, a parent or a legal guardian is made co-owner of the bank account.
What is a savings account?
A savings account is a brilliant option if you want to save money for a bigger purpose, like going on a vacation or buying a car or a house. It limits access to the account. You can only do six transactions per month in a savings account. It is also beneficial if you want to correct your spending habits. You don’t have everyday access to your account, which makes you follow the principle of buying what you need and not what you want. Saving accounts earn interest.
Advantages of having a savings account
Savings accounts have numerous benefits. Some of the points that give savings accounts the upper hand include the following:
- All the deposits are FDIC insured (but they have an insurance limit)
- You will always have money for difficult times and uninvited problems. You can help yourself in bad times.
- You can also send money to your loved ones in misery because you have been saving up funds in your account.
- Earring of interest helps in growing your wealth.
- You have limited access to the funds (six times per statement cycle), which makes you think wisely before making any transaction.
- You have access to transaction history. So you know where your funds are going.
- You have access to money management tools.
- You have access to your account using a mobile app.
How can a checking and a savings account work together?
If it is difficult for you to choose between the two, why not make both accounts? Once you know how smoothly you can work with them, it is a good idea. This way, you will be able to enjoy the benefits of both accounts.
It is normal to save money before your next paycheck arrives. The saved funds will go to waste if they stay in a checking account. When you establish both accounts at the same bank, it is very easy to transfer money between them, encouraging you to save. You can increase the percentage of your savings to a large extent if you immediately transfer saved funds to the savings account.
It is difficult to handle two bank cards, an ID card, a driving license and the card of any firm you work in simultaneously. You can save yourself from the mess if you make both accounts at the same bank. They offer one card for handling two different types of accounts. Some banks also offer to waive the maintenance fees of one account if you have two different banks at the same bank.
Bottom line
You will have to do global money transfers at some point. So, understanding the working and activities of different types of banks is necessary. Acknowledging the difference between savings and a checking account is one step. The next step is to determine which suits you best and get the most out of them. After going through the advantages and details of both accounts, it may be easy to decide what bank account you should register and use to work towards your goals.
You can also consider ACE Money Transfer for your financial matters. It is the best FCA-approved online banking service provider and money transfer company. It has unlimited services like sending money to foreign countries with the highest exchange rates and lowest transaction fees. It ensures no error in the transfer and builds the customer’s trust.