What is a Savings Account?

A savings account is a type of account offered to customers of banks, credit unions, and some other financial institutions, where the customer deposits money into the bank with the intent to leave the money there for longer periods of time than they would in their checking accounts. The bank agrees to keep the money for the customer in a guaranteed safe place, and they also agree that they will pay the customer a designated amount of interest on the money they have in the bank, making the savings account have the ability to increase in size without the customer actually having to add more money to it. Up to $100,000 dollars of your money is guaranteed to be safe in the bank you deposit it in. If you want to go withdraw your funds you are guaranteed that the money will be available to you. There are different types of these accounts for the different types of customers.

The banks will offer a passbook style, where customers deposit their money and are giving a small book that contains a register for listing all deposits, and withdrawals to the account. Most of this type of savings plan works on the principal that the customer is allowed to withdraw funds from their accounts once every month, or three times every quarter. If the customer makes more than one withdrawal a month, or three withdrawals a quarter they are charged a penalty fine. These fines can be as low as $1.50 and they can go over five dollars, read your material you have from your bank to ascertain what your fees would be. People deposit their money into the bank to save it for many different reasons. The common factor in all those reasons is that it is harder for them to remove the money from this type of account than it is from a checking. The harder it is to get to the money the more likely a person will do less impulse buying, and the more money they will save. Other than for the purpose of lending money, the bank’s primary function is to provide a person with a safe place to store their money.