Savings accounts are often pretty basic, as bank accounts go. Add money to one, and if you've got a high-yield savings account, you could see some pretty decent growth over time. And if your account is with an FDIC-insured bank (as it should be!), your money will be protected and waiting for you when you need it.
If you're paying for an expense using money from your savings account (say, booking flights and hotels for that sweet vacation you've been saving up for), you might wonder if you can just cut out the middleman and pay using your savings account directly. While it may technically be possible, it's not a good idea. Here's why.
How would making a payment using a savings account work?
When you make a payment from your checking account, you generally use one of a few different methods. You can write a paper check (how retro!), do a bank transfer using your routing and account numbers, pay with a debit card, or use a payments app that's linked to your account.
You may be able to access some of these payment methods using your savings account. If you're making a bank transfer payment, you may be able to plug in your savings account number and the bank's routing number, and enable the payment to be taken directly from the account. Similarly, you can link a savings account to a payments app and withdraw directly from it that way. And if you have a savings account that offers a debit card (not common!), you could make purchases with it.
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So why not make payments out of your savings like this? Well, your savings account isn't really designed to be a payments account. As such, many banks still enforce limits of six convenient withdrawals per month (this harkens back to Regulation D rules). Go over that number and you could incur a fee or even have your savings account changed to a checking account. And when you provide your savings account number and your bank's routing number to an outside party, you could be putting your money at risk. It's a much better move to use a different payment method.
Use these payment methods instead of your savings account
Your checking account was designed to make it easy to pay bills! As mentioned above, you can write a check or whip out a debit card. In the case of utility bills or mortgage/rent payments, you can set up bank transfers using your checking account.
A credit card is another fabulous way to make payments. Your line of credit isn't linked to your bank account balance, so if something goes wrong and you lose your credit card or it gets stolen, you're not liable for fraudulent charges. It's an extremely safe payment method. Plus, a rewards credit card gives you the opportunity to earn cash back or points on purchases you were going to make anyway. Your savings account doesn't give you that.
And if you're paying for something like a travel booking, you could be using a travel credit card and earning even more. When I book travel using money I've saved, I make the booking using my travel credit card, and then transfer the money from savings to a linked checking account so I can pay off the credit card using that money -- rather than paying for it directly out of my savings.
Your savings account is special
Your savings account is a home for your emergency fund and also for money you're saving for an expense in the next few years. If you have money you'll be spending sooner rather than later (say, for this month's bills), it's best kept in your checking account so you have easy access to it. And if it's for a longer-term goal (such as retirement), consider investing it with a brokerage, because doing so over a long time window gives you the opportunity to grow your money substantially.
In a pinch, sure, you might be able to pay bills with your savings account. But as you can see, there are better ways to tackle those bills, and your savings account has its own special purposes.
FAQs
Some banks and credit unions allow customers to set up direct debit to pay bills, such as a utility company or credit card issuer, from a savings account. You'll need to supply account information, including account and routing numbers, and once authorized, the billing company can withdraw funds directly from savings.
Can I use my savings account to pay bills? ›
Yes, you can pay bills from a savings account. However, it's not always advisable. Savings accounts have transaction limits — usually around six withdrawals per month — and exceeding these limits can lead to fees or other penalties.
Can I make a car payment with my savings account? ›
With automatic payments, your payment is debited monthly from your checking or savings account. To set up automatic payments, sign on, select your auto loan from Account Summary, and then select Set up Autopay.
Are you allowed to take money out of your savings account? ›
Typically, yes — your money is yours. But a savings account is designed to discourage frequent transactional use and may carry monthly withdrawal limits. Exceeding these limits can incur fees, have your account re-classified or have it closed altogether.
Can you make ACH payments from a savings account? ›
ACH payments apply to checking and savings accounts and include direct deposits and recurring payments. Nacha, originally the National Automated Clearinghouse Association, oversees and governs the ACH Network. ACH payments work by “pushing” and “pulling” money between bank accounts.
Can I buy a car with my savings account? ›
With a savings account, you'd normally need to transfer your money to a checking account first. With a money market account, you could write a check directly from that account when buying a car. If you want to lock in your interest rate, you can do that with a certificate of deposit (CD).
Is there any point in using a savings account? ›
Saving is setting aside some of your money for future use, rather than spending it. You can add to your savings in one-off or regular payments. And if you use an easy-access savings account, you can get back what you put in – plus the interest you've earned – whenever you want it.
Can you set up regular payment from savings account? ›
Setting up direct debits or standing orders is a breach of savings account Terms and therefore all regular payments need to be on a current account to enable continued payment.
Why can't I withdraw money from my savings account? ›
Savings accounts may have monthly transaction limits per federal rule Regulation D, which states that banks must penalize consumers for withdrawing from savings accounts more than six times per month.
What to use a savings account for? ›
A savings account is a deposit account designed to hold money you don't plan to spend immediately. This is different from a checking account, a transactional account meant for everyday spending, allowing you to write checks or make purchases and ATM withdrawals using a debit card.
Consumers are limited in their ability to make payments from savings accounts for a reason: Savings accounts weren't designed for frequent transactions. Historically, the Federal Reserve has limited the number of transfers or withdrawals from a savings account to six per statement period under Regulation D.
Do you get penalized for taking money out of your savings? ›
Many banks will penalize you by charging you an excessive withdrawal fee if you exceed that limit. Some may close the account or move it to a noninterest-bearing account. Excessive withdrawal fees often range from around $2 to $15, Bankrate found.
What happens if you withdraw all your money from a savings account? ›
What Happens When You Exceed the Limit on Number of Withdrawals? If you occasionally exceed the limit of the number of withdrawals, your bank may decline your excess transactions or charge you a fee. If you exceed that limit often, some banks may convert your savings account to a checking account or close the account.
Can I pay a bill from my savings account? ›
Technically, you might be able to pay bills using your savings account, if you can do a bank transfer with your account number, use a debit card linked to your savings, or use a payment app. However, your bank might limit savings account withdrawals to just six per month.
Can I make a payment out of a savings account? ›
To pay bills from a savings account, you must provide your account information—including routing and savings account numbers—to the payee. They will then remove the money from your account. While this should process without a problem, it does give an external party access to your account.
Can you write checks or pay bills directly from a traditional savings account? ›
Savings accounts are designed for saving money, earning interest, and providing security for future needs. While payments cannot be made directly from a savings account using checks, automatic transfers and mobile banking can be used for certain transactions.
Can I use my debit card with my savings account? ›
Some financial institutions have savings accounts with debit cards so that you can access your money for purchases or ATM withdrawals. Several others also offer savings accounts with ATM cards linked to an account, strictly for ATM usage.
Can my paycheck go into a savings account? ›
Can you have direct deposits sent to a savings account? Typically, yes—many direct deposit programs allow you to send your paycheck to a savings or checking account, and some even allow you to split it between the two.
Can you pay a direct debit from a savings account? ›
Since the 3rd June 2013, it has not been possible to set up any regular payments from your savings account. Setting up direct debits or standing orders is a breach of savings account Terms and therefore all regular payments need to be on a current account to enable continued payment.
Is it safe to use bank account to pay bills? ›
Online bill pay is included with an online bank account, and online bank accounts are generally very safe. Banking sites protect your accounts in a number of ways, including: Multifactor authentication. Alerts for suspicious activity.
