My paychecks get directly deposited into my checking account, and I haven't bothered to move any of it into my savings account because I know there are some drawbacks to having it in savings as opposed to checking where it's readily accessible. What has to be considered when moving money from checking into savings? Can arbitrarily large amounts be moved between the two or does it somehow kind of get locked up once it's in savings?
I know there are some drawbacks to having it in savings as opposed to checking where it's readily accessible.
There's one minor drawback: Federal Reserve Board Regulation D, the six withdrawal per calendar month limit (which has been suspended since the COVID outbreak). With a smidgen of forethought, it's trivially easy to work around.
What has to be considered when moving money from checking into savings?
"How much do I want to move into my savings account?" That's it...
Can arbitrarily large amounts be moved between the two?
In the US:
- Intra-bank: checking and savings account at the same bank. I don't recommend this, unless you already bank where the savings account APY is "high".
- Zelle, PayPal, Cash, Venmo, etc: somewhere around $2500/day and $5000 total per month. It varies by service.
- You can "only" transfer $25K per day (for free) using ACH; it can take up to three business days, though.
- Larger amounts require "wire" transfer, which are immediate, and cost money.
or does it somehow kind of get locked up once it's in savings?
LOL no. Where did you get that idea?
EDIT: #1: Savings are not investment; they are savings. #2 Even though banks lend money out, they do not lend out all the money; a healthy fraction must remain in the bank, so that there's enough cash on hand for expected and unexpected withdrawals. (This is called fractional banking.) (This was true until last year; a very bad decision, IMO.)
EDIT 2: what really locks your money up are CDs (whether as IRAs or plain old taxable ones). Of course, your money is never 100% locked up; you just might have to pay a fee/penalty to get to it.
You have a savings account without any forethought. That tells me you have the very typical situation of a bank providing a bundle of a checking and savings account. So I presume they're at the same bank, which is fine. *
Transfers between checking and savings will be a trivial matter. It will not require Zelle nor a wire transfer nor an EFT. For instance my bank has a UX specifically for transfers amongst your own accounts. You can do it at the ATM machine, and it has no limit. (But weirdly, you can't access that UX on the web or app). Because it is very low risk, it is lower security as well - for instance allowing it via their phone banking system, which is limited to things like this.
This type of savings account differs only in trivial ways. It may pay a tiny amount of interest in the savings. It can't be bound to a debit card. You can often do EFT withdrawals e.g. to pay credit cards. It is clearly the same basic sort of account, just with a switch flipped on a couple of features.
It is mostly there for you to use as a planning tool. It allows you to think of the money in checking as being for spending, and the money in savings as being for, well, saving for a rainy day. That can be very helpful for some people to visualize their money that way.
* They are just one "bucket" with 2 sub-buckets inside. Any bank deposit insurance such as FDIC will limit your insurance per bank, not per account, but that's only a problem when you have a fortune in there.