Can You Spend Money from a Savings Account?

Savings accounts are a safe and popular vehicle for stashing extra money, but they aren't intended to be cash machines. Here's what you need to know.

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Why there are limits on payments from your savings account

While it's possible to spend money from your savings account, there are several reasons why there are limits on payments:

• Savings accounts usually don't offer debit cards
• Many savings accounts have monthly withdrawal limits
• Using a savings account for everyday purchases can sabotage your savings efforts

These limits are in place to encourage saving and discourage excessive spending from your savings account. By imposing limits, financial institutions hope to encourage customers to consider other account options for spending.

How you can spend money from your savings account

Although spending money directly from your savings account may not be the best option, there are still ways you can access your savings:

• Withdraw cash: You can withdraw cash from your savings account using an ATM or by visiting a bank branch.
• Transfer money: You can transfer money from your savings account to your checking account and then use your checking account for everyday spending.
• Get a cashier's check: If you need to make a large purchase or pay a bill, you can request a cashier's check from your savings account.
• Direct debit: Some financial institutions allow you to set up direct debit from your savings account for recurring expenses like utility bills.

While these options provide access to your savings, it's important to consider the impact on your long-term financial goals and the potential fees or penalties associated with excessive withdrawals.

Bottom line

While you can spend money from a savings account, it's generally not recommended for everyday purchases. Savings accounts are designed to help you save money and earn interest, not for frequent spending. Consider other account options, like checking accounts or money market accounts, for your daily expenses.

Up next

If you're interested in learning more about managing your finances and maximizing your savings, check out our other informative articles:

• How to Build an Emergency Fund
• Tips for Saving for Short- and Long-Term Goals
• Strategies to Seed Your Retirement Fund
• Effective Ways to Pay Down Debt

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Can I purchase online directly from a savings account? You can, but there are better ways to save and spend

While it's possible to make purchases directly from your savings account, doing so could run afoul of banking regulations and compromise your savings goals. Here's what you need to know:

How do savings accounts work?

Savings accounts work by allowing you to deposit money into an account held at a financial institution. The money you deposit earns interest over time, helping your savings grow.

Do savings accounts have withdrawal limits?

Yes, many savings accounts have withdrawal limits to encourage saving and discourage excessive spending. These limits vary depending on the financial institution and the type of savings account.

Can you pay bills with a savings account?

While it's possible to pay bills from your savings account, it's generally not recommended. Savings accounts are designed for saving, not for everyday spending. Consider using a checking account for bill payments.

How to make purchases online with a savings account

If you choose to make purchases online with a savings account, here are a few steps to follow:

1. Open a savings account with debit card access.
2. Use your debit card to pay for your online transaction.

Better uses for your savings account

Instead of using your savings account for everyday spending, consider using it for:

• Building an emergency fund
• Saving for short- and long-term goals
• Seeding your retirement fund
• Paying down debt

The takeaway

While it's possible to spend money from a savings account, it's generally not recommended for everyday purchases. Savings accounts are designed for saving, not for frequent spending. Consider other account options, like checking accounts, for your daily expenses.

Can You Spend Money from A Savings Account? | SoFi

Savings accounts aren't designed for spending, so you may trigger fees if you use them for purchasing. Here are some details to help you avoid unwanted charges:

How Does a Savings Account Differ From a Checking Account?

Savings accounts and checking accounts serve different purposes. While savings accounts are designed for saving, checking accounts are designed for everyday transactions.

Can You Write a Check From a Savings Account?

While it's possible to write a check from a savings account, it's generally not recommended. Savings accounts typically have withdrawal limits and may charge fees for excessive transactions.

How to Spend (and Save) With a Savings Account

If you want to spend money while still maximizing your savings, here are a few tips:

• Open a SoFi Checking and Savings Account: SoFi offers a combined checking and savings account that can help you manage your finances more effectively.
• All your finances. All in one app: SoFi's mobile app allows you to easily track and manage your checking and savings accounts in one place.
• Student Loan Refinancing: SoFi also offers student loan refinancing options to help you save money and simplify your loan payments.
• Personal Loans: If you need additional funds for a major purchase or expense, SoFi offers personal loans with competitive interest rates.
• Online Investments: SoFi provides a platform for online investing, allowing you to grow your savings through various investment options.

What Is a Savings Account and How Does It Work?

A savings account is a deposit account held at a financial institution that provides security for your principal and a modest interest rate. Here's what you need to know:

What Is a Savings Account?

A savings account is a type of deposit account offered by banks and other financial institutions. It allows you to deposit money and earn interest on your savings.

How Savings Accounts Work

Savings accounts work by allowing you to deposit money into an account held by a financial institution. The deposited money earns interest over time, helping your savings grow.

Pros of Savings Accounts Explained

Savings accounts offer several advantages, including:

• Security for your principal: Savings accounts are insured by the FDIC, providing protection for your deposited funds.
• Modest interest rates: While savings account interest rates are generally lower than other investment options, they still provide some earnings on your savings.
• Easy access to your funds: You can withdraw money from your savings account at any time, making it a convenient option for emergency expenses.

Cons of Saving Accounts Explained

Savings accounts also have some disadvantages to consider:

• Lower interest rates compared to other investment options: While savings accounts provide some earnings, the interest rates are generally lower than other investment vehicles.
• Withdrawal limits: Savings accounts often have limits on the number of withdrawals you can make per month, which can be inconvenient if you need frequent access to your funds.
• Inflation risk: Over time, the purchasing power of your savings may be eroded by inflation if the interest rate doesn't keep up with inflation.

How to Maximize Earnings From a Savings Account

If you want to maximize the earnings from your savings account, consider these strategies:

• Shop around for the best interest rates: Different financial institutions offer different interest rates on their savings accounts. Compare rates and choose the one that offers the highest return on your savings.
• Consider high-yield savings accounts: High-yield savings accounts often offer higher interest rates than traditional savings accounts, allowing you to earn more on your savings.
• Automate your savings: Set up automatic transfers from your checking account to your savings account to ensure consistent contributions to your savings.
• Reinvest your interest: Instead of withdrawing the interest earned, reinvest it back into your savings account to accelerate your earnings.

How to Open a Savings Account

Opening a savings account is a straightforward process:

1. Choose a financial institution: Research different banks or credit unions and choose the one that best suits your needs.
2. Gather necessary documents: You'll typically need identification, proof of address, and your Social Security number to open a savings account.
3. Visit a branch or apply online: You can open a savings account by visiting a bank branch or applying online through the financial institution's website.
4. Deposit funds: Once your account is open, you can deposit funds into your savings account.

How Much to Keep in Your Savings Account

The amount you should keep in your savings account depends on your financial goals and personal circumstances. As a general guideline, financial experts recommend having at least three to six months' worth of living expenses in your savings account as an emergency fund.

How Do You Open a Savings Account?

To open a savings account, follow these steps:

1. Research different financial institutions: Compare interest rates, fees, and account features offered by different banks and credit unions.
2. Choose the best account: Select a savings account that aligns with your financial goals and preferences.
3. Fill out the application: Provide the required information and documents to open the account.
4. Deposit funds: Once your account is open, deposit funds into your savings account.

What Savings Account Will Earn You the Most Money?

The savings account that will earn you the most money depends on several factors, including the interest rate, fees, and account features offered by different financial institutions. Shop around and compare different options to find the savings account that offers the highest return on your savings.

How Do You Close a Savings Account?

To close a savings account, you typically need to follow these steps:

1. Contact the financial institution: Notify the bank or credit union that you want to close your savings account.
2. Withdraw or transfer funds: Withdraw or transfer the funds in your savings account to another account before closing it.
3. Submit a written request: Some financial institutions may require a written request to close the account.
4. Confirm closure: After submitting the request, confirm with the financial institution that your account has been closed.

The Bottom Line

While it's possible to spend money from a savings account, it's generally not recommended for everyday purchases. Savings accounts are designed to help you save money and earn interest, not for frequent spending. Consider other account options, like checking accounts or money market accounts, for your daily expenses.