Savings and checking accounts

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Key Points

What is a savings account?

A savings account is a safe place to put money aside for a future goal or for unexpected expenses. There are several kinds of accounts that can be used for saving, including regular savings, money market accounts and Certificates of Deposit, or CDs. Ask for details where you bank. Many banks offer Web sites that can assist you.

What is interest?

When you put your money in a savings account, the bank rewards you by adding a small amount of extra money to the account, called interest, on a regular schedule. As a result, your money grows! The amount of interest you earn will depend on which account you choose and the amount of money you keep in the account over time.

What is a checking account?

A convenient tool for managing your money day-to-day. An account that allows you to put checks or cash in (called making a deposit) or take money out (called making a withdrawal). It allows you to get cash when you need it and to pay for things in other ways than using cash—like writing checks or using a debit card. Different financial institutions offer a variety of checking accounts with different features, benefits, and fees. Shop around for the checking account that best meets your needs.

What is a check?

A safe and convenient way to pay for things from a checking account. Checks are paper forms that people use to transfer money from one place to another. A check is a written order that instructs a bank to pay a specific amount of money from a specific checking account to a specific person or entity, for example, a store. You can order checks when you need them, usually for a fee.

What is an Automated Teller Machine (ATM)?

A specialized computer used by bank customers to manage their money. Almost all ATMs allow you to withdraw money, and many allow you to make deposits. At some ATMs, you can print a statement (a record of your account activity or transactions); check your account balances; transfer money between your accounts; and even purchase stamps. You can usually access the most services at an ATM that’s operated by your own bank.

What is a debit card?

A debit card is another safe and convenient way to pay for things from a checking account. It can be used at ATMs. Because a debit card has a Visa® or Mastercard® logo on its face, you can use it wherever Visa® or Mastercard® debit cards are accepted. Keep in mind that a debit card is not a credit card. When you use a debit card, the money will be deducted from your checking account. With a credit card, you’re borrowing money to be repaid later.

How can checks and debit cards help me?

If you have checks or a debit card, you don’t have to carry large amounts of cash around with you. Each time you write a check or make a purchase with a debit card, you have a record of how much you spent, and where. That can help you pay closer attention to what you’re buying, how much you’re spending, and avoid spending more than you planned.

Many savings accounts limit how often you can take your money out. So for paying your monthly bills or making day-to-day purchases, checking accounts are a much better choice.
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