Guide to Transaction Accounts

Q: Can I use a non-transaction account for everyday purchases?

Non-transaction accounts limit pulling money out freely, so you would not be able to use one to make ongoing regular purchases. For everyday expenses, it’s best to use a transaction account as those accounts do not limit your purchases or withdrawals.

Q: How do I switch from a transaction to a non-transaction account?

If you want to move funds from a transaction account (like checking) to a non-transaction account (like savings), it can often be done online. However, you need to make sure your non-transaction account is completely set up, so be sure to speak with a representative from your financial institution.

Q: What fees are associated with each account type?

Some transaction accounts feature low monthly fees and opening balance requirements. For non-transaction accounts, you can face punitive fees for taking money out too early or too many times, depending on the specific account. It’s important to speak with a representative from your financial institution about their policies so you have all the information before moving forward.

Chris AlexisUpdated April 21, 2025

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

Transaction accounts are the backbone of everyday banking, offering convenient access to your money for spending, bill payments, and deposits. Whether you're managing personal finances or handling business expenses, understanding how these accounts work can help you make smart financial decisions. Keep reading to learn more on transaction accounts, including what they are, examples of transaction accounts, what non-transaction accounts are, and more.

What Is a Transaction Account?

A transaction account is a bank account that gives you instant access to your money. Also known as a checking account, people typically use them to pay their bills and make everyday purchases, like groceries or gasoline. In other words, these accounts are designed for plenty of transactions. Some banks offer incentives, such as low monthly fees and manageable balance requirements, for their transaction accounts. However, not all financial institutions make the same offers across the board. It’s important to talk to one of their representatives to make sure you have all the details before committing to opening an account with them.

Transaction Account Examples

The most common example is a checking account at either a brick-and-mortar bank, an online bank, or a credit union. These accounts typically are replenished through mobile transfers, check deposits, and direct deposits. Because they are built for numerous transactions, people put money in and pull it back out through wire transfers, ATM cards, debit cards, and ACH transfers. Other examples of transaction accounts include:

Demand-deposit accounts. Demand-deposit accounts allow you access to your money without notice. They do not have maturity periods, can earn interest in some cases, and do not limit the number of withdrawals you can make. Checking accounts fall under this category.
NOW accounts. A negotiable order of withdrawal (NOW) account is a demand-deposit account that generates interest, similar to an interest-bearing checking account.
Automatic transfer service accounts. An automatic transfer service account is a banking service that automatically transfers money between a person’s accounts.
Credit union share draft accounts. Credit union share draft accounts are used when you’re part owner of a credit union.

Now, if you can get a transaction account, you could also procure a non transaction account. Recommended: ACH vs Wire Transfer: What’s the Difference

What Is a Non-Transaction Account?

A non-transaction account is a bank account that is not designed for consistent transactions. If you have one, you will typically find yourself limited on how many transfers you can enact per month or you may experience waiting periods before you’re allowed to withdraw your money.

Non-Transaction Account Examples

Examples of non-transaction accounts include:

Savings accounts. A savings account is a deposit account designed to hold money not intended for daily use. It earns interest and has limited withdrawal capabilities per federal guidelines.
CDs. A CD, or certificate of deposit, is a savings tool where you can earn interest on a specific amount of money for a specific period of time. The catch, however, is that you can’t withdraw that money during the designated time period. If you do, you will face penalty fees.
Bonds. A bond is a type of loan you make to either a government entity or a company for a specific period of time. The party you loan the funds to agrees to pay back the entire sum, plus interest, for as long as they use your money.
IRAs. An IRA is an individual retirement account where you save money for retirement, along with potentially growing your money through investments and oftentimes getting tax breaks.
Money market accounts. Money market accounts are FDIC-insured deposit accounts that typically pay out higher interest rates than your average savings account. Some of them can restrict the number of withdrawals each month, so make sure to take that into consideration before opening one.
529 college savings plans. 529 plans are tax-advantaged accounts specifically for education expenses. Earnings grow tax-free if used for qualified education costs.

Recommended: Guide to High-Yield Savings Accounts

Differences Between Transaction and Non-Transaction Accounts

The biggest difference between transaction and non-transaction accounts is that transaction accounts allow immediate access to your money without limits or penalties. The speed at which you can access those funds is known as the speed of liquidity. Non-transaction accounts, on the other hand, limit the number of transfers and withdrawals you can make each month. They are designed for saving and/or investing, not for everyday spending.Recommended: How Many Bank Accounts Should I Have?

The Takeaway

Transaction accounts allow you access to your money without limits or punitive fees, while non-transaction accounts do not allow endless transfers and withdrawals. This distinction will be important when deciding what type of account to procure for your financial needs. For example, you may need an account to pay bills, buy groceries, fill up your gas tank, and supply money for a night out. In this case, you will need a transaction account.However, if you’re able to part with some of your money for a longer period of time so it can generate a decent amount of interest, then a non-transaction account might be the way to go.If you’re looking to open a high-yield savings account, Lantern by SoFi can help. Our online banking marketplace makes it easy to compare annual percentage yields and choose a bank account that’s right for you.Compare today’s high-yield savings rates including fees and balance minimums.

Frequently Asked Questions

Can I use a non-transaction account for everyday purchases?

How do I switch from a transaction to a non-transaction account?

What fees are associated with each account type?

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About the Author

Chris Alexis

Chris Alexis has been putting pen to paper and fingertips to keyboard since his youth. He ultimately grew into an accomplished and award-winning writer who loves using the power of language to connect with audiences. He also strongly enjoys learning about who he is writing for so he can create something that will truly resonate with them. He has worked for a variety of companies, each of which have given him more experience and insight.

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