Online savings accounts are a popular choice for growing your money while enjoying the convenience of managing your finances digitally. But what happens when you need to write a check? Can your online savings account step in, or is it better to turn to other account types? Let’s break it down.
Photo by Kaboompics.com
Are Checks Allowed for Online Savings Accounts?
In most cases, you can’t write checks from an online savings account, and this isn’t just limited to online banks—it applies to traditional savings accounts too. These accounts are designed for saving money, not for frequent transactions like paying bills or making purchases. Let’s look at some reasons why:
Limited Features for Transactions
Savings accounts are known as non-transactional accounts, meaning they’re not equipped for regular spending. Historically, federal regulations, such as Regulation D, restricted savings accounts to six withdrawals or transfers per month. While this rule is no longer strictly enforced, many banks still impose similar limits to encourage saving.
Because of these restrictions, savings accounts typically don’t come with:
- A checkbook
- The ability to pay directly with checks
- Debit card access for purchases
This makes it impractical to rely on a savings account when you need to write checks.
The Purpose of Savings Accounts
Banks structure savings accounts to focus on interest growth and long-term savings. Allowing frequent transactions, including check writing, could defeat this purpose and even pose logistical challenges for financial institutions.
What Are Your Alternatives?
While savings accounts don’t allow check writing, there are plenty of other ways to access your funds when you need to make payments or transfer money. Here are some solid options:
1. Use a Checking Account
The most straightforward solution is to transfer money from your online savings account to your checking account. Checking accounts are tailor-made for transactions, including unlimited check writing, debit card payments, and electronic bill payments.
How It Works:
Most online banks allow you to seamlessly transfer funds between your savings and checking accounts through their mobile apps or websites. Once the money is in your checking account, you can write checks without restrictions.
2. Get a Cashier’s Check
If you don’t have or want a checking account, consider requesting a cashier’s check. A cashier’s check is issued directly by your bank and guaranteed by the institution.
Steps to Obtain a Cashier’s Check:
- Log in to your online bank account.
- Request the check using funds from your savings account.
- Pick up the check at a branch or have it mailed to your address.
This method is more secure and is often used for large payments, like rent or purchasing a car.
3. Link Your Savings Account to a Payment App
In some cases, you can link your online savings account to payment apps like PayPal, Venmo, or Zelle. These apps let you transfer money and make payments directly from your savings account, though not all apps support savings account links.
Before You Link:
- Check your bank’s compatibility with payment apps.
- Read the terms for potential fees or limitations.
4. ATM Withdrawals
Another simple way to access funds is through ATM withdrawals. Some online banks allow you to withdraw cash from your savings account using a linked ATM card. However, this won’t solve your check-writing needs but may cover immediate cash requirements.
What About Money Market Accounts?
If you’re looking for savings benefits with the convenience of check-writing, consider a money market account. These accounts blend features of both savings and checking accounts. With many money market accounts, you can:
- Write a limited number of checks.
- Use a debit card for a restricted number of transactions.
Money market accounts often have higher minimum balance requirements and may charge fees if you exceed their transaction limits. They act as a middle ground for people who value flexibility without giving up interest growth.
Do Online Banks Offer Workarounds?
Some online banks have stepped up their game by offering additional tools for accessing savings account funds. For example:
- Digital Check Printing: Banks like Chime allow users to print checks or make virtual payments directly from the app.
- Seamless Transfers: Online platforms often make transferring funds to linked accounts faster and more intuitive.
Remember, these features vary widely by institution, so it’s essential to review your bank’s specific offerings.
Why Use a Savings Account at All?
Despite its limitations, a savings account plays an essential role in your financial plan. Here’s why:
- Interest Growth: Savings accounts offer competitive rates compared to checking accounts to grow your balance over time.
- Emergency Fund: With controlled access, savings accounts reduce the temptation to overspend, making them ideal for emergency funds.
- FDIC Insurance: Funds in savings accounts are typically insured by the FDIC (or NCUA for credit unions), offering peace of mind up to $250,000 per account holder.
Final Thoughts
While you generally can’t write checks from an online savings account, you’ve got plenty of options to access your money when needed. By pairing your savings account with a checking account or using services like cashier’s checks and payment apps, you can manage your finances with ease.
Ultimately, savings accounts are best suited for growing your money, reserving checking accounts and other tools for everyday transactions. By understanding the strengths and limitations of each account type, you’ll always have the right tool for the job.