Money · Banking basics

Checking vs. savings, and why you want both

Checking is for spending: debit card, bills, payment apps. Savings is for keeping: emergencies and goals, out of reach of everyday swiping. Open both, ideally at the same insured bank or credit union, set an automatic transfer to savings on payday, and compare interest: in September 2026 the national average was 0.37% for savings and 0.07% for interest checking, so it pays to shop. Deposits are insured up to $250,000 per depositor, per bank, per ownership category.

Easy10 min to read; 20 min to set up a transferFree if you pick no-fee accountsChecked October 2, 2026

You'll need

A photo ID (the bank will tell you what else it needs)
Your employer's direct deposit form

What to know

Use checking for money you spend. You can pay with a debit card or check, get cash at an ATM, pay bills online and send money with a payment app like Zelle. Source: consumer.gov¹
Use savings for money you're keeping, for emergencies and goals. It keeps that money separate from what you spend each month. Source: consumer.gov¹
Compare a few banks and credit unions before opening anything: account types, minimum balances and every fee. Source: consumer.gov¹ Credit unions offer the same accounts; you just have to be part of a group that's allowed to join. Source: consumer.gov¹
Avoid fees. Choose free checking and stay above any minimum balance, use your own bank's ATMs, spend only what you have, and ask whether direct deposit waives a fee. Source: consumer.gov¹
Shop for interest on savings. The FDIC's national averages (September 21, 2026) were 0.37% a year for savings, 0.07% for interest checking and 0.63% for money market accounts. Source: FDIC² Many banks pay more or less than average, so compare the annual percentage yield (APY).
Move money to savings on payday, before you can spend it. The CFPB suggests automatic transfers so saving happens without you remembering. Source: CFPB⁴ See Automating your savings.
Check the insurance. At an FDIC-insured bank, deposits are covered up to $250,000 per depositor, per bank, for each ownership category, and since 1933 no depositor has lost a penny of FDIC-insured funds. Look up your bank with the FDIC's BankFind tool. Source: FDIC⁵ Federally insured credit unions are covered by the NCUA. Source: NCUA⁶

Watch out Don't count on savings to cover your debit card. Spending more than you have in checking is overdrawing, and it means fees. Source: consumer.gov¹ Ask your bank how it handles a purchase you can't cover, and see Overdrafts and fees.

Which account for which money?

Sources: consumer.gov, CFPB and FDIC. Source: consumer.gov CFPB FDIC¹³²

Account	Best for	Access	National avg. rate (Sept. 2026)
Checking	Bills, debit card, payment apps	Debit card, checks, ATM, online	0.07% (interest checking)
Savings	Emergency fund, short-term goals	Transfers to checking, ATM or in person	0.37%
Money market account	Savings you rarely touch	Usually limits check, debit and electronic transactions; may require a minimum	0.63%

Setting up both

Compare at least a few banks and credit unions first Source: consumer.gov¹
Ask: Monthly fee? Minimum balance? ATM fees? Overdraft policy? Source: consumer.gov¹
Confirm FDIC or NCUA insurance Source: FDIC NCUA⁵⁶
Set direct deposit, then an automatic transfer to savings on payday Source: CFPB⁴

See it done

Video by Khan Academy Nonprofit

Types of bank accounts

Watch on YouTube: Types of bank accounts | Banking | Financial mathematics (TX TEKS) | Khan Academy

Full title on YouTube: “Types of bank accounts | Banking | Financial mathematics (TX TEKS) | Khan Academy”2024 · Checked October 3, 2026

Sal also covers money market accounts and CDs. For a first account, checking plus savings is the place to start.

Video won't load at school or work? No problem. Everything you need is in the steps; the video's just a bonus. Watch it on YouTube later.

If it doesn't work

Paying a monthly fee? Ask whether direct deposit or a minimum balance removes it, or switch to a free account. Source: consumer.gov¹
Keep dipping into savings? One option is keeping savings at a different insured bank so it's less handy to spend. Each bank's insurance is separate: $250,000 per depositor at each FDIC-insured bank. Source: FDIC⁵
Not sure how much to keep in savings? Start small. See How much to save, starting small.

Good to know

The details, if you want them. Tap a line to open it.

Money market account vs. money market fund

A money market account at a bank or credit union is an insured deposit. A money market mutual fund is an investment, not insured by the FDIC, even if it lets you write checks. Source: CFPB³

What's not insured

FDIC insurance doesn't cover stocks, bonds, mutual funds, annuities, crypto or safe deposit box contents, even at an insured bank. Source: FDIC⁵

New to banking?

See Opening your first bank account.

Take it with you

Printable card Download card (PDF)

Sources

Federal Trade Commission Opening a bank account (consumer.gov)
Federal Deposit Insurance Corporation National rates and rate caps
Consumer Financial Protection Bureau What is a money market account?
Consumer Financial Protection Bureau An essential guide to building an emergency fund
Federal Deposit Insurance Corporation Understanding deposit insurance
National Credit Union Administration Share insurance coverage

Lesson M1.2 · Last checked October 2, 2026 against the sources listed.

Report a mistake

Next in MoneyOverdrafts and fees, and how to avoid them

Once a week, if you want it

One new lesson or checklist a week. Totally optional. The lessons never need a sign-up.