Checking Vs. Savings Account Calculator

Deciding between a checking and savings account can be confusing. Our calculator helps you compare the two based on your financial needs, helping you choose the right account for your situation.

Key Differences Between Checking and Savings Accounts

Checking and savings accounts serve different financial purposes, and understanding these differences is crucial for making the right choice.

Access to Funds

Checking accounts offer immediate access to funds for daily transactions like paying bills, withdrawing cash, and making purchases. Savings accounts, on the other hand, are designed for long-term savings and typically have restrictions on withdrawals to encourage saving.

Interest Rates

Savings accounts generally offer higher interest rates than checking accounts. This is because banks can afford to pay more interest on money that's not being used for daily transactions. Checking accounts often have lower or no interest due to the higher transaction volume.

Interest Calculation

The interest earned on a savings account can be calculated using the formula:

Interest = Principal × Rate × Time

Where:

Principal is the amount of money in the account
Rate is the annual interest rate (expressed as a decimal)
Time is the number of years the money is saved

Fees

Checking accounts may have monthly maintenance fees, overdraft fees, or transaction fees. Savings accounts typically have fewer fees, but some may have withdrawal limits or early withdrawal penalties.

Purpose

Checking accounts are for everyday financial transactions. Savings accounts are for building an emergency fund, saving for specific goals, or earning interest on idle money.

Account Features

Checking accounts often come with features like check writing, debit cards, and online banking. Savings accounts may offer features like automatic transfers, interest compounding, and FDIC insurance.

How to Use This Calculator

Our calculator helps you compare checking and savings accounts based on your financial situation. Follow these steps to get the most accurate comparison:

Enter your current balance in both account types
Input your expected monthly deposits and withdrawals
Select your current interest rates for both accounts
Choose the time period you want to compare (1 year, 5 years, etc.)
Click "Calculate" to see the projected balances and interest earned

The calculator will show you:

The projected balance in each account after your selected time period
The total interest earned in each account
A comparison chart showing the growth of both accounts over time

Note: This calculator provides estimates based on the information you provide. Actual results may vary due to changes in interest rates, fees, or other factors.

Examples

Example 1: Emergency Fund

Suppose you want to build an emergency fund. You have $1,000 in a savings account earning 1.5% interest and $500 in a checking account with no interest. You plan to deposit $200 per month into both accounts.

After 5 years:

Savings account balance: $3,200 (including $1,000 interest)
Checking account balance: $1,600 (no interest earned)

Example 2: Short-Term Goal

You need $500 for a vacation in 6 months. You have $200 in a savings account earning 2% interest and $100 in a checking account with no interest. You plan to deposit $50 per month into both accounts.

After 6 months:

Savings account balance: $550 (including $10 interest)
Checking account balance: $400 (no interest earned)

FAQ

Which account is better for daily expenses?

A checking account is better for daily expenses because it allows easy access to funds for paying bills, making purchases, and withdrawing cash. Savings accounts are not designed for frequent withdrawals.

Can I have both a checking and savings account?

Yes, many banks allow you to have both account types. This can be beneficial as you can use the checking account for daily transactions and the savings account for long-term goals or emergency funds.

Which account earns more interest?

Savings accounts typically earn higher interest rates than checking accounts. This is because banks can afford to pay more interest on money that's not being used for daily transactions.

Are there any fees associated with these accounts?

Both account types may have fees. Checking accounts often have monthly maintenance fees, overdraft fees, or transaction fees. Savings accounts may have withdrawal limits or early withdrawal penalties.