Many investors use savings accounts to earn interest on money that they don’t need right away. However, sometimes they want to use their money to make a payment. Unfortunately, you cannot write checks from a savings account. Here’s what you can do instead.A financial advisor can help you figure out the best way for you to manage your money.
What Is a Savings Account?
A savings account is an interest-bearing deposit account offered by banks, credit unions and other financial institutions. Savings accounts are federally insured for up to $250,000 per account owner and provide a modest interest rate. Federal regulations limit the number of transactions you can have with your savings account and prohibit these accounts from writing checks.
Most investors have a checking and a savings account at their preferred bank. This tandem allows them to write checks from their checking account and earn interest on their savings account. Investors can freely transfer money between the two accounts based on their needs. The savings account can also be linked for overdraft protection if your checking account balance falls below zero.
No, federal regulations prohibit customers from writing checks against their savings accounts. Additionally, while savings accounts can be accessed through an ATM or debit card, you cannot use the debit card to make purchases using the money in your savings account.If you want to earn interest on your balances and be able to write checks, there are other account options available. These accounts provide additional flexibility and more earning power than a traditional savings account.
Interest-Bearing Checking Account
Many checking accounts now earn interest. While these interest rates tend to be modest, they are comparable to the interest rates on traditional savings accounts. Some online banks offer checking accounts with interest rates that are competitive with rates on high-yield savings accounts. And many of these online accounts have no minimum balance requirements or monthly fees.
A high-yield money market account offers the best of both checking and savings accounts. They give account holders the best interest rates on a savings account while offering the functionality of a checking account. Not all high-yield money market accounts offer check-writing functionality. Before opening your account, verify that this feature is included and what restrictions and fees there may be.
Many high-yield money market accounts have no minimum balance requirements or monthly fees. But, some require larger balances in order to receive the highest interest rates. Think about how much money you’ll keep in the account to determine if you can meet those balance requirements to earn more interest.
Money Market Mutual Fund
Money market mutual funds are offered by brokerage and investment companies. These accounts operate like a money market account offered by a bank or credit union. However, they don’t have the same FDIC protections on the first $250,000 in your account. Instead, investment companies are covered by SIPC protection. SIPC coverage protects up to $500,000 of cash and investments at each financial institution, of which cash is limited to $250,000 in protection.
Not all money market mutual funds have check-writing capabilities, so check with your investment company to verify if they offer this feature. If their money market mutual fund allows check writing, most have no limit to the number of checks that you can write. However, make sure that there are no fees associated with writing checks.
The Bottom Line
While a savings account is a good way to earn interest on your money and save for short-term goals, these accounts do not have check-writing privileges. Instead, investors have multiple options that earn interest and offer the ability to write checks. Before opening an account, compare interest rates, balance requirements, fees and limitations to determine which account is best for your situation.
Financial advisors keep up to date with the latest offerings from banks, credit unions, investment companies and other financial institutions. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Earning more interest can accelerate your goals and provide additional income each year. Because interest rates are low right now, it pays to shop around to find the best interest rates, fees and benefits for your money. Use our savings calculator to determine how much additional interest you can earn by switching to an account with a higher rate.
You typically can't write checks from your savings account, as most banks simply don't allow for it. They also don't issue debit cards with savings accounts for making payments or purchases. Your best bet for writing checks is to use your checking account to make payments quickly and safely.
Writing checks from a savings account is not possible; it can only be done from a checking account. Savings accounts are primarily for earning interest and occasional money transfers, not for check-writing.
You can't usually write checks from a savings account since banks don't generally issue checks for these accounts. Savings accounts are considered non-transaction accounts, which means they're not designed for everyday transactions.
If you do need to pay an occasional bill from a savings account, it's not as simple as writing a check from your checking account. To pay bills from a savings account, you must provide your account information—including routing and savings account numbers—to the payee.
A traditional checking account, also referred to as a standard or basic checking account, offers the ability to write checks. It also provides access to a debit card that you can use to make purchases and withdraw cash at ATMs. This type of checking account may charge a monthly maintenance fee.
The Bottom Line. You typically can't write checks from your savings account, as most banks simply don't allow for it. They also don't issue debit cards with savings accounts for making payments or purchases.
No, federal regulations prohibit customers from writing checks against their savings accounts. Additionally, while savings accounts can be accessed through an ATM or debit card, you cannot use the debit card to make purchases using the money in your savings account.
When it comes to comparing a checking vs. savings account, the main difference is that a checking account may allow you to write checks or make purchases and ATM withdrawals using a debit card. Savings accounts don't usually come with checks or debit cards.
To withdraw funds from your savings account, you can get cash at an ATM, go to a bank branch or transfer money to your checking account. Before taking money out of your savings account, however, weigh the purpose against your long-term financial goals.
Savings account holders who need to use their savings to make a payment generally cannot write checks from a savings account. However, they can transfer funds from a savings account into a checking account or purchase a cashier's check to make a payment.
With a savings account, you'd normally need to transfer your money to a checking account first. With a money market account, you could write a check directly from that account when buying a car. If you want to lock in your interest rate, you can do that with a certificate of deposit (CD).
ACH payments apply to checking and savings accounts and include direct deposits and recurring payments. Nacha, originally the National Automated Clearinghouse Association, oversees and governs the ACH Network. ACH payments work by “pushing” and “pulling” money between bank accounts.
Savings accounts are federally insured for up to $250,000 per account owner and provide a modest interest rate. Federal regulations limit the number of transactions you can have with your savings account and prohibit these accounts from writing checks.
A primary savings account is, fundamentally, a place to hold your money. It's an account you typically open along with a checking account, but one that you don't want to spend from on a regular basis. That means it's not for shopping or automatic bill payments.
No, you cannot typically write checks or pay bills directly from a certificate of deposit. CDs are not designed for day-to-day transactions but rather for long-term savings. They are intended to be held until maturity, at which point the funds, along with the accrued interest, can be withdrawn or reinvested.
Can I make an e-Check payment from my savings account? Yes. you can use a regular checking/saving account. No credit card checks, home equity line checks, etc.
Introduction: My name is Allyn Kozey, I am a outstanding, colorful, adventurous, encouraging, zealous, tender, helpful person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
