Once you’ve traded in your allowance for a steady paycheck, you’ll need more than a piggy bank to keep track of your income. That’s where checking and savings accounts come into play. To learn more about these financial vehicles and what distinguishes one from the other, refer to the guide below.

Checking Accounts

These bank accounts are designed for spending money. In the past, you might have used them primarily to write checks; today, most people pay with a bank-issued, pin-protected debit card. 

Checking accounts don’t have a withdrawal limit, which means you can take out funds as often as you’d like. You can also use your checking account information to make online payments, such as for rent or retail shopping. 

Some checking accounts offer cash back on certain purchases. Others may offer a nominal interest rate; this means if you leave money in your checking account, it will accrue interest over time. If you attempt to spend more money than you have in your checking account, the bank may allow it, but then charge an overdraft fee as a penalty.

Savings Accounts

These accounts are designed for saving money, such as to meet a financial goal. You might be using your savings account as an emergency backup fund—such as if you were to lose your job or become injured unexpectedly—or to finance a future purchase, such as a wedding, vacation, or the down payment on a home.

 If you set up a savings account through the same bank as your checking account, you can link the two. This will allow you to transfer sums straight from your checking account to build your savings each time you get paid. 

On the other hand, if your checking account is running low, you might be able to link your savings account as a form of overdraft protection. This means, if an automatic payment hits your checking account, and you don’t have enough funds to cover it, the bank will pull from your savings instead. 

Since their purpose is to save, most accounts have limits on how much you withdraw in a given period. They also have higher interest rates, so your nest egg can make money over time. 

If you’re interested in opening a checking or savings account through the same trusted local bank, consider Magnolia Bank of Hodgenville, KY. They’ve been protecting their clients’ funds for over 100 years, as well as providing SBA and mortgage loans to those who need a leg up. To learn more about their convenient mobile and online banking services, visit the website. You can also call (270) 358-3183 to speak with a representative about your options.