My checking account yields just over 3% APY. This may sound very high, and it is for a checking account, but it's a credit union and they make money off the multiple transactions I have to use their debit card for to get that rate. My (online) savings account yields ~1%. I find myself in a bit of a dilemma, not sure if I should put all or most of my money (between $7000-9000) into my checking to earn the 3%, or keep it in the supposedly "safer" savings account. I am undecided as to whether this is a safe place to have a majority of my money. How safe are checking accounts for large amounts of money? Is it worth it for this high yield?


In the US bank or credit union checking, savings, CD's are insured through FDIC or NCUA. The coverage is for $250,000. This limit can be increased by having multiple accounts. You, your spouse, and a Joint account with your spouse, are considered 3 different accounts, so you could have $750K coverage.

IRA funds are considered a separate pot of money for insurance coverage.

Here is an explanation from NCUA and FDIC.

There is no safety difference between savings and checking. There are differences regarding minimum balances, maximum number of transactions per month, and fees. But they are equally safe.

  • +1. Could there be a "safety" issue with regard to fraud? Something where the savings isn't as available as the checking, and therefore a bit "safer"? Practically however, this is the correct answer.
    – MrChrister
    Jun 25 '12 at 7:19
  • My primary concern with checking was definitely fraud. Does the NCUA cover losses due to fraud?
    – RunChiRun
    Jun 25 '12 at 21:29
  • 1
    @EricPsy - check with your credit union regarding their policy on fraud. That is a topic that both you and the CU have responsibility for.
    – MrChrister
    Jun 25 '12 at 21:32

There is no difference in safety form the perspective of the bank failing, due to FDIC/NCUA insurance. However, there is a practical issue that should be considered, if you allow payments to be automatically withdrawn from your checking account In the case of an error, all of you money may be unavailable until the error is resolved, which could be days or weeks. By having two accounts, this possibility may be reduced. It isn't a difference between checking and savings, but a benefit of having two accounts. Note that if both accounts are at the same bank, hey make take money from other accounts to cover the shortfall.

That said, I've done this for years and have never had a problem. Also, I have two accounts, one at a local credit union with just enough kept in it to cover any payments, and another online account that has the rest of my savings. I can easily transfer funds between the two accounts in a couple days.


In personal finance, most of your success is determined by personal habit rather than financial savvy. Getting in the habit of making regular deposits to your savings account will have a much larger effect on your situation than worrying about which account pays the highest interest rate (particularly as neither one of them matches the current inflation rate, which is over 3%).

So go ahead and put your money in a savings account, but not because of the interest or safety, but because it's a "savings" account.

  • Interestingly, inflation is considerably lower than 3% at the moment and is anticipated to remain that way for some time.
    – RunChiRun
    Jul 2 '12 at 2:54
  • My bad, it was 3% for 2011 and I hadn't seen new numbers yet. Jul 4 '12 at 2:57
  • No problem. =) The latest reported rate was 1.7% in May.
    – RunChiRun
    Jul 5 '12 at 15:51

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