You probably have a checking account to pay for everyday expenses and a regular savings account to cover emergencies or finance future dreams. But have you ever wondered, “Can I purchase online directly from a savings account?”
The short answer is yes—it’s possible, but doing so may not be in your best interest. Not only do savings accounts often have monthly withdrawal limits, but using savings for everyday purchases could compromise your future financial goals.
How do savings accounts work?
A savings account is a deposit account that allows you to deposit money for safekeeping and withdraw it when necessary. While your money is in the account, it earns interest—an added perk that pays you back when you take the step to save.
When deciding where to stash your cash, you have several types of savings accounts to choose from—each suited for different financial goals. For example, a certificate of deposit (CD) could be ideal if you want to earn a higher interest rate than a traditional savings account and don’t mind locking up your funds for a set period.
On the other hand, a money market account may be a better option if you want flexible access to cash via a debit card or checks but still want a higher-than-average interest rate.
Do savings accounts have withdrawal limits?
Many savings accounts have monthly withdrawal limits—typically six per month—due to Regulation D: Reserve Requirements of Depository Institutions. Since banks typically use the money in savings accounts to make loans to other customers (don’t worry—that’s completely normal), customers making regular withdrawals could put the bank’s cash reserves at risk. That’s why the Federal Reserve created this rule so that financial institutions could more easily maintain an appropriate level of cash reserves.
In 2020, however, the government lifted the six-withdrawal-per-month limit to give consumers better access to their cash during the pandemic. Today, some banks have reverted to limiting monthly transactions, so it’s important to check with your bank on limits it might enforce.
If your bank restricts how often you can dip into your savings, you need to carefully track your withdrawals. Exceeding the limit could result in fees, forced conversion to a checking account, or account closure.
Can you pay bills with a savings account?
Jason Scott, senior vice president and regional manager of Sunrise Banks, says this question is “subjective now.” Since some banks no longer impose savings account withdrawal limits, there’s “not a downside to it” financially. If your bank won't process bill payments directly from your savings account, Scott says you can transfer money from savings to your checking account and pay bills from there.
However, Sylvia Guinan, senior vice president of investments at Wells Fargo Advisors, says that using a savings account is “not a good option.” The money within a savings account is reserved “for the future” and “not to be used for current needs and goals.” She cautions, “If you get into the habit of spending, you’ll ultimately deplete the funds.”
The bottom line? Just because you can purchase online with a savings account doesn’t mean it’s the best option. A few pros and cons can shine a light on why.
Pros
- Saving a step. If you don’t have to transfer money from checking to savings, you can save a step when you’re ready to spend.
- Make a large purchase. If you’ve saved up for a 60-inch TV, you can make that purchase online using your savings account when the perfect sale arrives.
- Emergency management. When life’s surprises come along, knowing your savings are ready to pay those expenses is comforting.
Cons
- Bad habits. If you start using your savings account for spending, you’re likely compromising good savings habits.
- Better options. If you think you need regular access to your savings, an interest-bearing checking or money market account is likely a better choice.
- Increasing debt. Without adequate savings, you could be forced to take on high-interest debt through credit cards in emergencies.
How to make purchases online with a savings account
Guinan says your checking account is “meant for day-to-day living,” which includes making purchases online. However, if you won’t be deterred and choose to use your savings account to shop online, a few steps can help you do so.
1. Open a savings account with debit card access.
Scott says most banks don’t issue debit or ATM cards for savings accounts, so finding an account that works for you may be tricky.
Once you’ve chosen a bank, opening your savings account is a straightforward process. You’ll need to show identifying information and proof of address. Then you’ll need to make the required opening deposit, which varies by bank. You can generally transfer money into your new account directly from another bank account or via check or wire transfer. If you visit the branch in person, you can also deposit cash.
Then, you might need to sign some documents to complete the opening of your account. Finally, you need to activate your new debit card and set a memorable but secret PIN.
2. Use your debit card to pay for your online transaction.
Once your debit card is active, you’re ready to shop online. Put your desired items into your virtual shopping cart and click the checkout button.
Next, enter your card’s account number, expiration date, and three-digit security code (if requested) into the form fields, and follow the onscreen prompts to complete your order. Since your debit card has a Visa or Mastercard logo, it will function similarly to a credit card. However, the total amount due will be deducted from your savings account balance instead of receiving a bill for the transaction later.
Better uses for your savings account
Since savings accounts are for saving and checking and money market accounts are for spending, it’s best to use your savings for something other than online shopping. Today, several high-yield savings accounts offer annual percentage yields (APYs) of at least 5%. Those interest rates—plus a bit of discipline—can help you achieve a wide range of money-related objectives.
Build an emergency fund
An emergency fund can help you pay for unplanned but urgent expenses without taking on debt or dipping into your retirement savings.
Save for short- and long-term goals
Whether you want to pay for your upcoming vacation in cash or eventually have enough money for a down payment on your dream home, a savings account can be a great place to stash money for your goals until you’re ready to use it.
Seed your retirement fund
If you’d like to open a retirement account with a large initial cash injection, you can build that nest egg in your savings account over time.
Pay down debt
Amassing a tidy sum in your savings account can help you make extra payments to pay down your debt faster.
The takeaway
While using your savings account to pay bills or shop online might sound appealing (especially if money is tight), doing so could do more harm than good. Guinan says you should create a realistic budget and use your checking account to pay for current expenses instead.
Ready to start saving? Check out these ideas to make your cash earn more cash.
Need to keep your hands off your savings? Consider a six-month or one-year CD—a great idea for wedding savings, buying a car, or that down payment on a dream house.
Want an easy way to save for retirement? Consider a robo-advisor. You can put your retirement goals on autopilot with low to no minimum deposits and fees.
Want an easier way to pay for online purchases? Check out our reviews of the best buy now, pay later apps to help you pay cash on your schedule.
