This blog is for informational purposes only and not an offer of any specific account or service. For current details on our checking accounts, including terms and fees, please visit midflorida.com or speak with a representative. Account features and conditions may change. Membership eligibility required.
There used to be a time when checking and savings accounts had two separate functions. Your checking account held the money you used daily.
In the meantime, your savings account held the money you used for emergencies and financial goals.
Now, though, the lines are a little blurrier.
You can make unlimited withdrawals from your savings account, and thanks to high-yield checking accounts like the MIDFLORIDA Credit Union high-yield checking account, the money in checking can earn interest.
This leads to an interesting question: Which is better, high-yield checking or savings accounts?
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High-yield checking accounts are more flexible
A checking account’s biggest advantage over a savings account is its flexibility. You have no limits on how much you can deposit and withdraw from a checking account.
Thanks to debit cards and electronic payments, you can make transactions almost anywhere.
While savings accounts no longer have the restrictions they once did, they are still less flexible than checking accounts.
While this is a benefit if you’re trying to grow your savings, a checking account is your best bet if you prioritize easy access to your money.
High-yield checking accounts can have better interest rates
Savings accounts might be better known for their interest rates, but high-yield checking accounts tend to have higher interest rates.
- A high-yield checking account has an average interest rate of around 3.00% APY
- Traditional savings accounts, on the other hand, usually offer interest rates of less than 1.00%
At MIDFLORIDA, the High Yield Checking account offers a 5.00% APY on balances up to $10,000. Balances.1 This is significantly higher than the Regular Savings account’s 0.01% APY.2
You generally don’t have to meet conditions to earn interest on a savings account
While a High-Yield Checking account has a substantially better interest rate than a Regular Savings account, it also comes with conditions you must meet to get that interest.
At MIDFLORIDA, for instance, you have to meet the following conditions every month to avoid a monthly maintenance fee on the High Yield Checking account:
- Be enrolled in Online Banking
- Make 10 purchases with a debit card
- Maintain a minimum daily balance of at least $1,500.
- Make direct deposits totaling at least $1,000
A savings account, on the other hand, generally pays interest automatically. You don’t have to meet all the conditions, so you can sit back and let your money grow.
Savings accounts are better for avoiding temptation
When you put money in a savings account, you do more than just set it aside for a rainy day or financial goal. You’re making it harder to succumb to the temptation to spend it.
If you keep all your money in a checking account, you’ll have an easier time spending it if you want to.
If you’d like to spend money in your savings account, you’ll consciously need to transfer that money to your checking account.
During that time, you’ll have to consider why you’re spending that money and whether the purchase is worth it.
The advantage of having both a high-yield checking account and a savings account
You’ve probably noticed that both high-yield checking and savings accounts have advantages the other lacks.
This brings up an important point—why not have both?
You can take advantage of both features when you have a high-yield checking account and a savings account.
In fact, you can even combine both accounts to get even closer to your financial goals.
- Savings scenario 1: You might keep the bulk of your money in a high-yield checking account to take advantage of the interest rate, then transfer the interest to a savings account each month.
- Savings scenario 2: Set aside money for bills. You can then transfer that money to your high-yield checking account so that when the money gets withdrawn, the account’s balance will not fall below the minimum amount requirement.
Take advantage of different types of accounts
Once you get comfortable managing a high-yield checking account and savings account, consider opening up another account.
For instance:
- MIDFLORIDA money market accounts can store your emergency fund
- A MIDFLORIDA certificate of deposit is a great way to save money long-term
- MIDFLORIDA club accounts can help you set aside money for year-end expenses
Open a checking account and savings account at MIDFLORIDA
If you’re trying to decide between opening a high-yield checking account or a savings account, consider the advantages each offers.
High-yield checking accounts are more flexible and usually have higher interest rates.
Conversely, savings accounts don’t have conditions for earning interest and can help reduce spending temptation.
Your best bet might be to open both a high-yield checking account and a savings account. That way, you can take advantage of both accounts’ features.
You can even develop a financial strategy that takes advantage of both accounts.
Benefit from both high-yield checking accounts and savings accounts when you become a member at MIDFLORIDA today.
Even better, if you’re a new member and open a MIDFLORIDA Free Checking account, you might be eligible for a $200 bonus3 if you meet the conditions. Find out more today!
