Digital Wallet vs. Bank Account: What’s the Difference?

Quick Answer

Digital wallets and bank accounts can both help you store and spend money. However, digital wallets are primarily meant as a replacement for the physical cards, keys and passes that you might otherwise need to carry. Bank accounts are offered as a safe place to keep your savings.

Young women making a contactless payment using a digital wallet in a restaurant.

Digital wallets and bank accounts offer two different ways to store and use your money. Digital wallets can be a convenient option for keeping all your payment cards, loyalty cards and other information in a single app. And some let you add funds to the wallet itself. Bank accounts—there are several types—offer a safe place to store your money and potentially earn interest on your savings.

What Is a Digital Wallet?

Digital wallets are apps that let you electronically store the items you might keep in your wallet, such as debit, credit, transit, insurance, loyalty program and gift cards.

Digital wallets also support other types of cards and information, including event tickets, boarding passes, keys, passwords, employee badges and student IDs. Residents of some states can also create and add an electronic version of their driver's license or state ID to their digital wallet.

Popular digital wallets include:

Digital wallets have security features that help secure the information you add to the wallet.

For example, many use tokenization to keep your payment details secret. When you use a digital wallet to pay with a debit or credit card in the wallet, the wallet sends the merchant an encrypted token instead of your actual card information. The approach can protect you from card skimming and might make a digital wallet safer than paying with a physical card.

One limitation, however, is that digital wallets are still not accepted everywhere. Therefore, it's a good idea to also carry cash or a physical card as a backup in case you try to pay with a digital wallet at a store and the contactless card doesn't work.

How to Use a Digital Wallet

Digital wallets differ slightly in how they work and what you can do with the wallet. But you can often get started by creating an account online, and some of the more popular options, such as Apple Wallet, Google Wallet and Samsung Wallet, may come preinstalled on your phone.

Once you've set up your wallet, you can:

  • Add cards and information. You may be able to add debit and credit cards to your wallet by scanning the card and verifying the information. There may also be an option to connect your wallet to your bank or credit card's mobile app, or an option within that app to add a card to your digital wallet.
  • Add funds. Some digital wallets let you store money in the wallet. You can then use the stored funds to make purchases instead of using one of your connected payment cards.
  • Make payments in stores. Once you add a payment card or funds to your digital wallet, you can access it via the wallet app on your smartphone or smartwatch. After unlocking your account by scanning your face or finger, or entering your PIN, you can tap your device on a point-of-sale terminal to pay.
  • Display stored information. You can unlock your digital wallet to reveal and use other items in your digital wallet, such as event tickets and boarding passes.
  • Make payments online. Depending on the wallet you use, you might see it pop up as a payment option when shopping on your phone. Select the wallet during checkout and follow the prompts to log in or verify your identity with biometrics.

Sometimes, there are also ways to use your digital wallet without having to unlock your phone or smartwatch. For example, you might be able to use it to pay for transit in certain cities with a quick tap, or use digital keys you added to the wallet to automatically unlock your car when you're nearby.

What Is a Bank Account?

A bank account is a deposit account that you can open with a bank or credit union. There are many types of bank accounts, including:

The two most common are checking and savings accounts.

Checking accounts tend to be for everyday expenses. The money in the account usually doesn't earn much interest, but you can easily access it with a connected debit card or check.

Savings accounts tend to be for short- and medium-term savings goals. You can't easily spend the money in your savings account using a debit card, but you can earn interest on your savings—sometimes a lot if you have a high-yield savings account.

Most bank accounts are FDIC insured, and up to $250,000 per depositor, per account ownership category and per bank is guaranteed by the FDIC. This can make bank accounts a safe place to keep your money even if the bank fails.

Manage Your Finances

Find Digital Checking Accounts

Experian Logo
$50 with qualifying direct deposits
FDIC Insured

How to Open a Bank Account

You can open a bank account in person simply by visiting a bank or credit union and talking to a teller. They'll have you fill out forms, provide personal information and potentially provide an initial deposit. Depending on the type of account you want to open, the bank or credit union employee can walk you through your different options and get you set up in a single visit.

You may be able to quickly open a bank account online in just a few steps:

  1. Compare different accounts. Consider the various accounts to see which offers the best features with the fewest fees.
  2. Create an account. To help keep your account secure, use a strong password that you won't use with any other online accounts.
  3. Enter your information. You may need to share your name, address and Social Security number. Additionally, you may need to upload pictures of a government ID and a document that verifies your current address.
  4. Make an initial deposit. Some bank accounts have an opening deposit requirement.

The bank account or credit union you apply to open an account with may check your ChexSystems report in the process. If you have a negative banking history—unpaid negative balances and involuntary account closure, for instance—your application to open an account could be rejected.

Once your account is open, you may want to explore the various features of the website and, if available, the mobile banking app.

When to Use a Digital Wallet vs. Your Bank Account

Digital wallets can be a convenient and relatively safe place to keep your payment cards and other information organized. This is particularly the case if you have a lot of credit cards, loyalty cards and other information that you want to have on hand without having to carry physical copies.

You also might prefer using a digital wallet if you have trouble getting or don't want to open a bank account. And some digital wallets keep the money you store at a partner FDIC-insured bank. But that's not always the case, so double-check the fine print before loading funds into a digital wallet.

Even if the money in your digital wallet is insured, however, you won't necessarily earn interest like you can with a bank account. It may also be much easier to do certain things with a bank account than some digital wallets, such as deposit cash and checks or set up direct deposit.

Choose the Best of Both

Most digital wallets aren't meant to replace bank accounts, and most bank accounts don't have the same features as digital wallets. So, rather than thinking of it as one or the other, consider how you can make the most of both types of accounts.

Compare the different digital wallets that are compatible with your devices to see what cards and information you can add to them to make your life easier. And consider opening a new bank account if there's an option that's more convenient or has a higher interest rate than your current account. While you're at it, you could also look into the top credit cards to see if you can benefit from opening a new card.