What is the difference between a checking account and a savings account?

A checking account is designed for daily transactions, bill payments, and frequent withdrawals, offering easy access to funds. A savings account is intended for storing money you don't need immediately, earning interest, and building up funds for specific goals, typically with fewer transactions allowed.

How much money should I keep in a savings account?

Financial experts recommend keeping an emergency fund of three to six months' worth of essential living expenses in a savings account. Beyond that, you can keep funds for short-term goals (within 1-3 years) in savings. For long-term goals, consider investing for potentially higher returns.

Are online savings accounts safe?

Yes, online savings accounts are generally very safe. As long as the online bank is insured by the FDIC (Federal Deposit Insurance Corporation), your deposits are protected up to $250,000 per depositor, per institution, per ownership category, just like traditional banks.

Can I lose money in a savings account?

You cannot lose your principal deposit in an FDIC-insured savings account due to bank failure, up to the $250,000 limit. However, your money's purchasing power can decrease over time if the interest rate earned is lower than the rate of inflation.

What is a good APY for a savings account in 2026?

As of April 2026, a good APY for a high-yield savings account (HYSA) is typically in the range of 4.50% to 5.25%. These rates are significantly higher than the national average for traditional savings accounts, which currently hovers around 0.47%.

How often does interest compound on a savings account?

Interest on savings accounts can compound daily, monthly, or quarterly. The more frequently interest compounds, the faster your money grows, as you earn interest on your previously earned interest more often. Always look at the Annual Percentage Yield (APY) to understand the true annual return, as it accounts for compounding.

Are there any limits on how much I can deposit into a savings account?

While there aren't typically federal limits on how much you can deposit into a savings account, banks are required to report cash deposits over $10,000 to the IRS. Additionally, the FDIC/NCUA insurance limit is $250,000 per depositor, per institution, per ownership category, so very large balances might require spreading funds across multiple institutions for full insurance coverage.

Savings Accounts: Types, Benefits, & Best Rates | One…