Could I replace my checking account with a savings account?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Post Reply
Topic Author
Yarlonkol12
Posts: 968
Joined: Thu Apr 11, 2019 4:28 pm

Could I replace my checking account with a savings account?

Post by Yarlonkol12 »

Hi Bogleheads,

I currently have a checking account, my use case with this account is:

- Receive multiple direct deposits and ACH transfers in per month
- Occasionally deposit paper checks using mobile check deposit
- 2 outgoing ACH transfers a month to pay Credit Cards
- 1 outgoing ACH transfer out per month with any remaining cash to my brokerage account

As I don't need to write paper checks, I've never used a debit card, and I don't need to send wire transfers, wouldn't using a savings account instead of a checking account be the more secure bank account option? From what I understand the Savings Account supports outgoing ACH transfer as well as mobile deposit of checks, also get better yield on idle cash

I understand the savings account can only support 6 withdrawals per month, but that would be plenty for my use case

Is anyone else using a savings account as their primary bank account in this way? Thank you for any suggestions
My posts are for entertainment purposes only.
User avatar
anon_investor
Posts: 15111
Joined: Mon Jun 03, 2019 1:43 pm

Re: Could I replace my checking account with a savings account?

Post by anon_investor »

Yarlonkol12 wrote: Fri May 27, 2022 7:16 pm Hi Bogleheads,

I currently have a checking account, my use case with this account is:

- Receive multiple direct deposits and ACH transfers in per month
- Occasionally deposit paper checks using mobile check deposit
- 2 outgoing ACH transfers a month to pay Credit Cards
- 1 outgoing ACH transfer out per month with any remaining cash to my brokerage account

As I don't need to write paper checks, I've never used a debit card, and I don't need to send wire transfers, wouldn't using a savings account instead of a checking account be the more secure bank account option?

I understand the savings account can only support 6 withdrawals per month, but that would be plenty for my use case

Is anyone else using a savings account as their primary bank account in this way? Thank you for any suggestions
Yes, I use a Ally Savings account to pay my CC bills and transfer money to my brokerage. It has the ability to do mobile check deposit and direct deposit.
gac1979
Posts: 235
Joined: Thu Nov 03, 2016 2:03 pm

Re: Could I replace my checking account with a savings account?

Post by gac1979 »

Why do you believe it would be more secure? It’s still a demand deposit account. If someone gets ahold of that account number, he/she could still drain your savings. Your suggestion is actually more risky if you let idle cash sit there since you have more to lose than you otherwise would with a checking account. I think the ideal option is to have a checking and savings without any sort of overdraft protection. Move idle cash to the savings and don’t have it linked to anything else (ach or otherwise). Keep only what you need in your checking and have all activity originate out of the checking account.
User avatar
sunny_socal
Posts: 2732
Joined: Tue Mar 24, 2015 4:22 pm

Re: Could I replace my checking account with a savings account?

Post by sunny_socal »

A savings account offers no advantages whatsoever over a checking. Most banks force you to open both at the same time for some reason - and most of those savings accounts are unused.

I wouldn't change anything if I were you.
User avatar
JoMoney
Posts: 16260
Joined: Tue Jul 23, 2013 5:31 am

Re: Could I replace my checking account with a savings account?

Post by JoMoney »

Chase offers an account called their "Chase Secure Banking" account that's essentially a checking account that does not allow for paper check writing, so if you consider that a "Feature" that's of benefit to you, then, yeah.. using a savings account (that also doesn't allow for check writing) might be another way to get that benefit

I had a thread asking essentially what you are:
viewtopic.php?t=371591

Didn't get many positive responses, it's not really the way I've been going about things, but I think it would be entirely possible to do for me, since all my expenses can be put on credit card, and the credit card can be paid via ACH withdrawal from a savings account.

FWIW, Fidelity's CMA account has most all the features of a bank account with debit card refunding any fees, online bill pay, it's optional whether or not you choose to enable check writing, and there are higher yielding money market funds you can deposit in and be debited from.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
mhalley
Posts: 10424
Joined: Tue Nov 20, 2007 5:02 am

Re: Could I replace my checking account with a savings account?

Post by mhalley »

There was a law that prevented savings accounts from having more than 6 withdrawals/transfers per month. Check with your bank to see if that is in effect for your account, in case at some point you need more transactions.
https://www.bankrate.com/banking/savings/regulation-d/
EddyB
Posts: 2431
Joined: Fri May 24, 2013 3:43 pm

Re: Could I replace my checking account with a savings account?

Post by EddyB »

mhalley wrote: Fri May 27, 2022 11:41 pm There was a law that prevented savings accounts from having more than 6 withdrawals/transfers per month. Check with your bank to see if that is in effect for your account, in case at some point you need more transactions.
https://www.bankrate.com/banking/savings/regulation-d/
The legal limit was removed in 2020, although it wouldn’t surprise me if some banks continue to apply a limit.
muffins14
Posts: 5432
Joined: Wed Oct 26, 2016 4:14 am
Location: New York

Re: Could I replace my checking account with a savings account?

Post by muffins14 »

Yarlonkol12 wrote: Fri May 27, 2022 7:16 pm Hi Bogleheads,

I currently have a checking account, my use case with this account is:

- Receive multiple direct deposits and ACH transfers in per month
- Occasionally deposit paper checks using mobile check deposit
- 2 outgoing ACH transfers a month to pay Credit Cards
- 1 outgoing ACH transfer out per month with any remaining cash to my brokerage account

As I don't need to write paper checks, I've never used a debit card, and I don't need to send wire transfers, wouldn't using a savings account instead of a checking account be the more secure bank account option? From what I understand the Savings Account supports outgoing ACH transfer as well as mobile deposit of checks, also get better yield on idle cash

I understand the savings account can only support 6 withdrawals per month, but that would be plenty for my use case

Is anyone else using a savings account as their primary bank account in this way? Thank you for any suggestions
I agree with those who think there are no special advantages from something called “savings” vs something called “checking”
Crom laughs at your Four Winds
User avatar
anon_investor
Posts: 15111
Joined: Mon Jun 03, 2019 1:43 pm

Re: Could I replace my checking account with a savings account?

Post by anon_investor »

muffins14 wrote: Sat May 28, 2022 1:05 am
Yarlonkol12 wrote: Fri May 27, 2022 7:16 pm Hi Bogleheads,

I currently have a checking account, my use case with this account is:

- Receive multiple direct deposits and ACH transfers in per month
- Occasionally deposit paper checks using mobile check deposit
- 2 outgoing ACH transfers a month to pay Credit Cards
- 1 outgoing ACH transfer out per month with any remaining cash to my brokerage account

As I don't need to write paper checks, I've never used a debit card, and I don't need to send wire transfers, wouldn't using a savings account instead of a checking account be the more secure bank account option? From what I understand the Savings Account supports outgoing ACH transfer as well as mobile deposit of checks, also get better yield on idle cash

I understand the savings account can only support 6 withdrawals per month, but that would be plenty for my use case

Is anyone else using a savings account as their primary bank account in this way? Thank you for any suggestions
I agree with those who think there are no special advantages from something called “savings” vs something called “checking”
The difference in interest rate maybe. Ally Bank offers 0.10% for checking and 0.75% for savings.

I have dedicated savings accounts to pay my CC bills, there is never more than that month's bill(s), so a hack wouldn't wipe me out.
andypanda
Posts: 1992
Joined: Sun Nov 12, 2017 8:11 pm
Location: Richmond, Virginia

Re: Could I replace my checking account with a savings account?

Post by andypanda »

I use both. I've had a checking account and a money market/savings account at a major bank since 1975. Since the beginning of on line banking I have found it convenient to keep most of the money in the savings account and only transfer what I need to checking. For instance, we are beginning two bathroom tear outs Tuesday and I'll need $30k. I will move the money to checking tomorrow and will write them a check. Neither account is tied to an investment account fwiw. When I move money in, I move it to checking and immediately transfer it to money market.

I did the same thing for the four payments we made on 2.5 PVC decks we just had built. They wanted 3% to use a credit card.
(The half is four 8-foot wide steps to an 8' x 4' platform for our French doors. It includes welded aluminum railings with double powder coats. The county building inspector wanted to know where the contractor got the nice railings for the decks.)
User avatar
JoMoney
Posts: 16260
Joined: Tue Jul 23, 2013 5:31 am

Re: Could I replace my checking account with a savings account?

Post by JoMoney »

Seems like the advantages of savings (only) account are:
- (potentially) higher interest rates
- security of not having debit card or check writing being able to draw against it (that's presumably not needed)
- some banks require few hoops to jump through to maintain a free savings account, whereas for free checking will often require minimum amounts/frequency of direct deposits or debit transactions
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
NYCaviator
Posts: 1925
Joined: Sat Apr 09, 2016 5:06 pm
Location: NYC

Re: Could I replace my checking account with a savings account?

Post by NYCaviator »

Yarlonkol12 wrote: Fri May 27, 2022 7:16 pm
As I don't need to write paper checks, I've never used a debit card, and I don't need to send wire transfers
Are you interested in this because of the interest rate or the security?

The 6 ACH limit can be a pain. Savings accounts are not meant to be checking accounts, so you run the risk of the bank shutting down your account if that's what you are using it as.

Also, you say you don't need debit cards or paper checks... until you do. Do you travel internationally? Then you will need a debit card. Are you getting work done on your house? You'll probably need a check unless you want to pay a cc fee.

If you are concerned about getting a higher yield, how much are you really keeping in checking? They do have high-yield checking accounts out there, but unless you are keeping tons of money in a checking account, the interest doesn't matter. At the end of the day it's negligible.

If you are concerned about security, this forum tends to skew towards people who are overly concerned with security (google voice numbers, 6 Yubikeys, VPNs, etc.), and you're going to hear about how you need to do everything to lock your account down. Bottom line is the bank is legally required to give you your money back if its stolen. So just keep enough in checking to cover bills and the rest in savings. Lock your debit card, don't order checks, check your account, etc. You'll be fine. You have to weigh reasonable security precautions against the hassle factor.
backpacker61
Posts: 1608
Joined: Wed May 20, 2020 6:36 am

Re: Could I replace my checking account with a savings account?

Post by backpacker61 »

Yarlonkol12 wrote: Fri May 27, 2022 7:16 pm Is anyone else using a savings account as their primary bank account in this way? Thank you for any suggestions
My parents used a savings ("passbook") account as their sole financial account in the 1950's. At that time, savings accounts were held at different institutions ("Savings and Loans" for passbook accounts, and banks for personal checking and business accounts). It was cheaper to have a passbook account than it was to have a checking account, required lower account minimums, and they were relatively poor. Today, "Savings and Loan" institutions have mostly gone away, and banks offer both savings and checking accounts.

Savings accounts are not more secure. The main advantage they have over checking accounts is that they (still) have lower monthly account maintenance fees and lower account minimums to avoid those account maintenance fees. You can use a debit card to withdraw cash from a savings account if you need to. Savings accounts may offer a slightly better interest rate on deposits. If those features are of value to you, I would say that it's fine to switch to a savings account only.

I use a savings account to hold assets for paying quarterly estimated taxes to the IRS, but not for much more than that.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
User avatar
JoMoney
Posts: 16260
Joined: Tue Jul 23, 2013 5:31 am

Re: Could I replace my checking account with a savings account?

Post by JoMoney »

NYCaviator wrote: Sat May 28, 2022 7:56 am...
Also, you say you don't need debit cards or paper checks... until you do. Do you travel internationally? Then you will need a debit card. Are you getting work done on your house? You'll probably need a check unless you want to pay a cc fee...
FWIW, when was living/traveling internationally almost everything I purchased was done on a credit card (with no foreign transaction fee), and on the occasion I did need cash I used an ATM machine. Many banks will give you an ATM card for a savings account (if you even need that), at some banks that's the only way to get an "ATM only" card, if you get a checking account they'll force a Visa/MC Debit card along with it.
If for some reason someone did need a check for something, if it's a brick and mortar bank you could get the bank to issue a cashiers check. The last few times I've needed a check, it had to be a cashiers check - one was to purchase a car, the other for a rental security deposit, and in neither case would they accept a personal check. Cashiers check has the potential benefit of not needing to balance the checkbook register or waiting around for the personal check to actually get deposited somewhere and clear before everything balances out.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
andypanda
Posts: 1992
Joined: Sun Nov 12, 2017 8:11 pm
Location: Richmond, Virginia

Re: Could I replace my checking account with a savings account?

Post by andypanda »

"Today, "Savings and Loan" institutions have mostly gone away,"

I hope they buried them deep enough. :)


"The savings and loan crisis of the 1980s and 1990s was the failure of 1,043 out of the 3,234 savings and loan associations in the United States from 1986 to 1995."
SunnySideUp
Posts: 73
Joined: Thu Dec 23, 2021 9:48 am

Re: Could I replace my checking account with a savings account?

Post by SunnySideUp »

Since my CU (Navy Federal) informed me a few years ago that the regulation imposing the 6 ACH transfer per month limit on savings accounts had been rescinded (and that as a result they (NFCU) had removed this limit on all savings accounts), I've operated as if my Money Market Savings Account was both my HYSA and my checking account. My MMSA:
  • pays > 0% interest (if balance >= $2500) though 0.45% is not as competitive as it was 6 months ago...,
  • is used for (mostly ACH-based) CU Billpay,
  • receives mobile check deposits,
  • receives direct deposits,
  • directly participates in wire transfers,
  • directly participates in intra- and (ACH) inter-bank transfers, and
  • can have unlimited (free) checks written against it (though I rarely write a check).
  • (I never use debit cards, but I'm sure I could get such for my MMSA.)
Regarding security, since both account types can be involved in the same types of transactions, I have no reason to believe my savings account is intrinsically any more (or less) secure than my (now-unused) checking account.

So it appears to me that the only perceptible difference between checking and MMSA (or any lesser savings) accounts is the amount of interest paid, which makes checking accounts (those paying less interest than NFCU's MMSA, meaning pretty much all of them) obsolete. Aside: does anything (except marketing/misperception fears) prevent NFCU from changing the name of their MMSA to "High Yield Checking"?

I acknowledge the possibility that other financial institutions might offer HYSA's which lack some of the above-listed capabilities (in which case it might become necessary to use a coupled checking account having such capabilities as a workaround), but that would be because the institution chose to limit the capabilities of their HYSA account, not because HYSA's in general are prevented by regulation from offering such capabilities.
Last edited by SunnySideUp on Sat May 28, 2022 1:43 pm, edited 1 time in total.
User avatar
indexfundfan
Posts: 3961
Joined: Tue Feb 20, 2007 10:21 am
Contact:

Re: Could I replace my checking account with a savings account?

Post by indexfundfan »

I am using the Alliant Savings account as my transactional account. All my credit card payments are debited automatically through this account. In the rare case when I need to use a paper check, I either transfer the money to the checking account (which I usually keep at $1) for the payment or let it auto-draft from the savings account (free).
My signature has been deleted.
Post Reply