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Your checking and savings accounts have very different purposes.
While a checking account is a good place to store money you'll use in the short term, it's not a place to progress toward long-term goals. Savings accounts are meant to keep money available when you need it as liquid cash, but — in the case of high-yield savings — also keep it growing with interest. Most savings accounts also have a federally mandated limit on withdrawals, generally charging fees on anything over six withdrawals per month.
Savings accounts are made to store money. When used correctly, they could help your money work harder in a few ways.
1. A savings account helps you grow money with more interest
Your checking account can't help you to grow your money. The average checking account earns .04% interest according to the FDIC, if it earns interest at all. While some savings accounts don't earn much interest either — a traditional savings account earns .06% — high-yield savings accounts could help your money grow. High-yield checking accounts are available, but they're not common through traditional banks and often require high minimum balances.
While interest rates are always changing, high-yield savings accounts can earn as much as 1% in interest depending on the bank you use. High-yield savings accounts aren't any different from typical savings accounts, and there are fee-free options from banks you already trust that can help your money earn more.
2. Savings accounts put your money out of sight and out of mind
Having money in your checking account can make it easy to overspend. By routing money away from your checking account and into your savings, you can save more.
Simply putting the money into a different account could be enough to indicate to yourself that money is off limits. "I consider my savings accounts walled off from my checking and daily spending needs," writes Business Insider contributor Eric Rosenberg.
If keeping your money in a separate account isn't enough, moving your savings to a different bank from your checking account could be helpful to put up those mental and logistical barriers.
3. They offer a way to organize your money
Savings accounts can help you divide your money to keep track of your goals. Some savings accounts, like Ally, have features to help you separate your money into different buckets, or you can easily open multiple accounts.
Business Insider contributor Elizabeth Aldrich uses Ally's high-yield savings account with buckets. "Logging in and seeing my savings broken up into various accounts helps me mentally organize my money and visualize where I'm at in terms of each different savings goal," she writes.
Similarly, Business Insider contributor Choncé Maddox opened 13 savings accounts at Capital One to keep her goals separate. "I've tried the 'one big pot' strategy in the past, and I found it pretty confusing," she writes. "I didn't know if I could afford to spend $400 on new tires or if some of the money in that account was supposed to go toward an upcoming medical bill."
When all of your savings are sitting together, it can be hard to tell how close you are to the finish line. Dividing your money into separate savings accounts can help make it easier to plan and prioritize your goals individually.
4. Savings accounts force you to think about the future
In a checking account, money is for 'now' spending — you likely have a card that can access the money anytime. With a savings account, that isn't the case. You're putting money away for the future, so you've probably already thought about what you want to do with it.
To make the most of your savings account, you'll have to plan how much you want to save, what goals you're working towards, and your timeline. Having a savings account will force you to think about your financial future, if you haven't already.
5. Savings accounts can help make wealth-building automatic
Making automatic deposits into your savings account is a simple way to increase your balance each month without having to lift a finger.
Business Insider personal finance correspondent Tanza Loudenback used automation to double her savings balance in a year. "With automated savings, the money comes out of my paycheck before I even see it, so I don't know what I'm missing," she writes. "I just assume that money is off-limits."
Loudenback used her employer's payroll portal to direct the money directly out of her paycheck, so it never even hit her checking account. But, automated deposits can also be done by sending money from your checking to your savings account automatically.
Some accounts are checking/savings hybrids
Several online banks, including Wealthfront and HMBradley, have started to offer accounts that function as hybrid checking and savings, which generally come with a debit card and high-yield-savings-level interest rates.
There are both pros and cons to this approach. On the plus side, your money is in one place (nice and easy to keep track of), and you're most likely earning more interest on the money that would be in a traditional checking account than you would otherwise.
On the minus side, a handy debit card makes it awfully easy to spend your savings, by accident or on impulse. Also, experts recommend a checking account be a stopping point for your money, not a destination. Keeping every dollar in one place with a hybrid account could make it hard to organize, strategize, and designate your money to specific goals.
Note that hybrid checking and savings accounts are relatively rare compared to separate high-yield savings and checking, so if this option appeals to you it's unlikely you'll find one at your chosen bank.