Good yield vs. safer route (Checking vs. Savings)
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. 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  However, there is a practical issue that should be considered, if you allow payments to be automatically withdrawn from your checking account  In the case of an error, all of you money may be unavailable until the error is resolved, which could be days or weeks.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."
This is a very good question! The biggest difference is that when you put money in a savings bank you are a lender that is protected by the government, and when you buy stocks you become an owner. As a lender, whether the bank makes or loses money on the loans it makes, they still maintain your balance and pay you interest, and your principal balance is guaranteed by the government (in the USA). The bank is the party that is primarily at risk if their business does not perform well. As an owner, you participate fully in the company's gains and losses, but you also put your money at risk, since if the company loses money, you do too. Because of this, many people prefer to buy funds made up of many stocks, so they are not at risk of one company performing very poorly or going bankrupt. When you buy stock you become a part owner and share in the profitability of the company, often through a dividend. You should also be aware that stocks often have years where they do very poorly as well as years when they do very well. However, over a long period of time (10 years or more), they have historically done better in outpacing inflation than any other type of investment. For this reason, I would recommend that you only invest in the stock market if you expect to be able to leave the money there for 10 years or more, ideally, and for 5 years at the very least. Otherwise, you may need to take the money out at a bad time. I would also recommend that you only invest in stocks if you already have an emergency fund, and don't have consumer debt. There isn't much point in putting your money at risk to get a return if you can get a risk-free return by paying off debt, or if you would have to pull your money back out if your car broke down or you lost your job. Banks' savings interest is ridiculous, has always been, compared to other investment options. But there's a reason for that: its safe. You will get your money back, and the interest on it, as long as you're within the FDIC insurance limits. If you want to get more returns - you've got to take more risks. For example, that a locality you're borrowing money to will default. Has happened before, a whole county defaulted. But if you understand the risks - your calculations are correct. A checking account is one that permits the account holder to write demand drafts (checks), which can be given to other people as payment and processed by the banks to transfer those funds. (Think of a check as a non-electronic equivalent of a debit card transaction, if that makes more sense to you.) Outside of the ability to write checks, and the slightly lower interest rate usually offered to trade off against that convenience, there really is no significant difference between savings and checking accounts.  The software needs to be designed to handle checking accounts if it's to be sold in the US, since many of us do still use checks for some transactions. Adding support for other currencies doesn't change that. If you don't need the ability to track which checks have or haven't been fully processed, I'd suggest that you either simply ignore the checking account feature, or use this category separation in whatever manner makes sense for the way you want to manage your money. "Depends on your definition of ""secure"". The most ""secure"" investment from a preservation of principal point of view is a non-tradable, general obligation government bond. (Like a US or Canadian savings bond.) Why? There is no interest rate risk -- you can't lose money. The downside is that the rate is not so good. If you want returns and a reasonably high level of security, you need a diversified portfolio." The yield on treasury bond indicates the amount of money anyone at can make at virtually zero risk.   So lets say banks have X [say 100] amount of money. They can either invest this in treasury bonds and get Y% [say 1%] interest that is very safe, or invest into mortgage loans [i.e. lend it to people] at Y+Z% [say at 3%]. The extra Z% is to cover the servicing cost and the associated risk. (Put another way, if you wanted only Y%, why not invest into treasury bonds, rather than take the risk and hassle of getting the same Y% by lending to individuals?) In short, treasury bond rates drive the rate at which banks can invest surplus money in the market or borrow from the market. This indirectly translates into the savings & lending rates to the banks' customers. $23,000 Student Loans at 4% This represents guaranteed loss. Paying this off quickly is a conservative move, while your other investments may easily surpass 4% return, they are not guaranteed.  Should I just keep my money in my savings account since I want to keep   my money available? Or are there other options I have that are not   necessarily long term may provide better returns? This all depends on your plans, if you're just trying to keep cash in anticipation of the next big dip, you might strike gold, but you could just as easily miss out on significant market gains while waiting. People have a poor track record of predicting market down-turns. If you are concerned about how exposed to market risk you are in your current positions, then you may be more comfortable with a larger cash position. Savings/CDs are low-interest, but much lower risk. If you currently have no savings (you titled the section savings, but they all look like retirement/investment accounts), then I would recommend focusing on that first, getting a healthy emergency fund saved up, and budgeting for your car/house purchases.  There's no way to know if you'd be better off investing everything or piling up cash in the short-term. You have to decide how much risk you are comfortable with and act accordingly. I would go with option B. That is safer, as it would leave you with more options, in case of an unexpected job loss or an emergency. If your checking account has a card associated with it, then keeping funds in savings reduces the risk that some kind of fraud will wipe you out. Why do savings accounts for businesses offer less yield than bank accounts for individuals?  The money held in savings account on a collective average substantial amount stays with the Bank. The Bank is better able to predict and thus invest this money in individual savings account in market to make more money. Money held in Business accounts are unpredictable and can get withdrawn, the Bank is thus not able to predict the behaviour and hence not able to invest this better to get good returns, hence the interest offered is low. Most Banks have special products for Businesses that would give better return but come with some kind of lock-in or minimum balances. I think it's only a choice of terminology.  Typically with a money market account has check-writing privileges whereas a savings account does not. In terms of rates, this blog has a good list of high interest yield savings accounts. http://www.hustlermoneyblog.com/best-bank-rates/ Disclosure: I am not affiliated with this blog.  I just think it is a good resource to compare the rates across different banks. "From a quick look at sources on the web, it looks to me like Money Market Accounts and savings accounts are both paying about the same rate today: around 1%, give or take maybe 0.4%. I suppose that's better than nothing, but it's not a whole lot better than nothing. (I saw several savings accounts advertising 0.1% interest. If they mailed you a check, the postage could be more than the returns.) Personally, I keep a modest amount of emergency cash in my checking account, and I put my ""savings"" in a very safe mutual fund. That generally gets somewhere from making maybe 3% a year to losing a small amount. Certainly nothing to sing about, but better than savings or money markets. Whether you are willing to tolerate the modest risk or the sales charges is a matter for your personal situation and feelings." Yield can be thought of as the interest rate you would receive from that investment in the form of a dividend for stocks or interest payments on a bond.  The yield takes into account the anticipated amount to be received per share/unit per year and the current price of the investment.   Of course, the yield is not a guaranteed return like a savings account.  If the investment yield is 4% when you buy, it can drop in value such that you actually lose money during your hold period, despite receiving income from the dividend or interest payments. "Building on the excellent explanation by ""Miichael Kjörling"": Why would you rather ""term deposit"" your money in a bank and only earn interest of certain percentage but not not invest in stocks / real state and other opportunities where you will not only earn much higher dividends / profit but will have an opportunity for capital gains, multiple times like Apple's last 4 years(AAPL) ?? This is all down to risk / reward and risk taking.  More risk             = More profit opportunities / More Losses ( More Headache) Less risk(Govt BONDS) = Less profit / Less Losses (peace of mind)" Cash is king. PIN-based debit transactions are cheap. In terms of credit cards, a regular (ie. not a gold card) with no rewards has the lowest rates.  Bigger merchants with lots of card volume likely have better deals that make the differences less pronounced. "It would be incredibly unusual for the same institution to offer checking and savings accounts with exactly the same features/benefits (including interest, etc). The reason is that (in the USA, anyways) the Fed makes banks keep a certain percentage of their total assets (called the reserve requirement) ""in house."" Checking account deposits cannot be re-loaned 100%--some of the money you put in your checking account must be held by the bank in its vaults. Savings accounts are not limited in this way. So logic dictates that if depositing into one type of account is better for the bank than the other (ie, they can use more of the money to make money), they will reward people for using the one that is more beneficial to their bottom line. I'm recalling this from college finance 101, so I may be slightly mis-remembering things, but I'm 99.99% sure that this is the primary reason you see checking accounts with lower interest rates--banks would prefer you to use savings accounts, and set up incentives so that you will. Sorry, I know this doesn't really answer your question, but I think it may help you understand your options a little better (I hope!)"