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Checking and Savings Accounts: Knowing the Difference Between the Two

At Valley Federal Credit Union, we want for you to be informed about where your money is going and how safe it is. The two most common services at financial institutions are checking and savings accounts. Although somewhat similar, they both work very differently. Before opening either of these, it’s important to know the difference between the two so you can best use them both!

Credit unions offer lower rates on loans and credit cards. Find out how low our rates are by contacting us today.

Checking Accounts

A checking account is regularly used for everyday money transactions, like grocery shopping or gas pumping. They allow you to easily access your cash through ATMs and/or debit cards. Checking accounts have several common fees, including:

  • Maintenance Fees – Some banking companies charge maintenance fees while others waive them if you meet certain criteria, like maintaining a minimum balance or setting up a direct deposit.
  • Overdraft Fees – These occur when you spend more than what’s in the checking account.

When looking for the perfect checking account, keep an eye out for sign-up bonuses. Some credit unions will have seasonal promotions that offer special rates, gifts or minimal fees.

Savings Accounts

Unlike checking accounts, savings accounts are managed less frequently by their owners. They can earn interest and are one of the best options to hold your finances if you plan on saving for major purchases or for emergency funds. Keep in mind that federal law limits the number of transfers made with these accounts each month. The biggest difference between a savings and checking account is that most savings accounts don’t come with personal checks or a debit card, and you cannot make online purchases with them. However, they are accessible via ATMs.

A savings account is best for:

  • Emergencies – Life is unpredictable. It’s helpful to have a savings account for emergencies.
  • Big ticket items – With big ticket items, you’ll want to save money in an account that’s secure and easy to keep track of.
  • Financial stability – Depositing a portion of each paycheck into a savings account will improve your financial habits and keep you from spending impulsively.

Choosing a Credit Union

Banks are for-profit companies that rely on stockholders. Credit unions, on the other hand, are not-for-profit institutions owned and operated by their members (account holders). Since credit unions are member-focused, potential members must meet certain requirements depending on the institution. Since they cater to members and not stockholders, credit unions can offer lower interest rates on loans and credit cards, lower minimum balances and lower fees.

Let’s Get Started

Valley Federal Credit Union offers a variety of accounts for your every need, including retirement, Christmas savings and even youth accounts. We are a family-oriented financial institution that’s 10,000-members strong and growing. We offer services that keep your interests in mind. Visit our credit union in Brownsville today to get stared!

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