June 10, 2026 · Ethan Sebastian
Bank Accounts: Checking vs. Savings
"Bank account" is one of the most common phrases we hear when we talk about money. But it's often used loosely, without a full understanding of what a bank account actually is — or the main types you can have. In the U.S., knowing the difference helps you manage your money well and get the most out of each type.
What Is a Bank Account?
A bank account is a safe place to store your money, with easy access when you need to take it out. It lets you spend without carrying physical cash, and lets money be deposited directly, in real time. A bank account is also an important part of building your financial history. To learn how, see our post What to Know to Build Credit as an Immigrant.
A bank account does more than hold deposits and withdrawals. It can also give you:
• A debit card
• Easy transfers of money
• Access to ATMs
• Online bill pay
• Interest earned on the money you keep in it
A deposit is when you add money to your account. A withdrawal is when you take money out or make a purchase. Most actions use your account number and routing number — a set of numbers unique to you that identifies both your account and the bank that holds it.
Where to Open a Bank Account
There are three main types of places to open an account. Each offers both in-person and online setup.
Traditional banks: These have physical branches. They're a good fit if you want in-person customer service or plan to make deposits in person often (for example, JPMorgan Chase, Bank of America, Wells Fargo, Huntington).
Credit unions: These are member-owned, nonprofit institutions that work almost the same as banks. They often offer better interest rates and lower fees (for example, Alliant, PenFed, Connexus).
Online banks: These are digital-only, with no physical branches. They often offer higher savings rates and no monthly maintenance fees (for example, Ally, Capital One 360).
Types of Bank Accounts
Besides the types of banks above, there are also different types of accounts. Here are the two main ones and when to use them.
Checking account: A checking account is for everyday, day-to-day spending. It's easy to access and is usually where you deposit wages, salaries, or other income. You use it to pay bills, buy everyday items, or withdraw cash — with no limit on how often.
Savings account: A savings account is mainly for longer-term saving — money you want to set aside over time. It usually earns more interest than a checking account, so your money grows just by sitting there. A savings account may limit how often you can withdraw. There's no longer a federal limit, but many banks still set their own — often around six withdrawals a month — and may charge a fee if you go over. These accounts work best for goals or an emergency fund rather than everyday use.
What You Need to Open an Account
To open an account, it helps to bring a government-issued photo ID and proof of where you live (like a utility bill or lease). You'll also need a tax ID number — but this does NOT have to be a Social Security number. If you don't have an SSN, many banks accept an Individual Taxpayer Identification Number (ITIN) instead, and some accept a foreign passport or consular ID. For the difference between an SSN, ITIN, and EIN, see our post EIN vs. ITIN vs. SSN: What to Know. Most banks also ask for a small minimum deposit to open the account. Requirements vary, so it's worth calling ahead or visiting a branch to ask what they accept.
Summary
Opening a bank account has real benefits: you can build credit, use a debit card, get paid by direct deposit, and keep your money safe. At the same time, it helps to understand the difference between a checking and a savings account so you can get the most out of each.
Disclaimer: This article is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Rules around banking, accounts, and fees are complex and change over time. Always consult a qualified financial professional before making decisions specific to your situation. Novi Opes assumes no liability for any actions taken based on this article.