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A savings account is a
bank account A bank account is a financial account maintained by a bank or other financial institution in which the financial transaction A financial transaction is an Contract, agreement, or communication, carried out between a buyer and a seller to Trade ...
at a
retail bank Retail banking, also known as consumer banking or personal banking, is the provision of services by a bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultane ...
. Common features include a limited number of withdrawals, a lack of cheque and linked
debit card A debit card (also known as a bank card, or check card) is a that can be used in place of to make purchases. It is similar to a , but unlike a credit card, the money for the purchase must be in the cardholder's at the time of a purchase and i ...
facilities, limited transfer options, and the inability to be overdrawn. Traditionally, transactions on savings accounts were widely recorded in a
passbook A passbook or bankbook is a paper book used to record bank or building society A building society is a financial institution owned by its members as a mutual organization. Building societies offer banking A bank is a financial instit ...
, and were sometimes called passbook savings accounts, and
bank statement 300px, Example of a checking account statement for a fictional bank. A bank statement is an official summary of financial transaction A financial transaction is an Contract, agreement, or communication, carried out between a buyer and a sell ...
s were not provided; however, currently such transactions are commonly recorded electronically and accessible online. People deposit funds in savings account for a variety of reasons, including a safe place to hold their cash. Savings accounts normally pay interest as well: almost all of them accrue
compound interest Compound interest is the addition of interest Interest, in finance and economics, is payment from a debtor, borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, ...

compound interest
over time. Several countries require savings accounts to be protected by
deposit insurance Deposit insurance or deposit protection is a measure implemented in many countries A country is a distinct territorial body or political entity A polity is an identifiable political entity—any group of people who have a collective identit ...
and some countries provide a government guarantee for at least a portion of the account balance. There are many types of savings accounts, often serving particular purposes. These can include accounts for young savers, accounts for retirees,
Christmas club The Christmas club is a special-purpose savings account, first offered by various banks and credit unions in the United States beginning in early 20th century, including the Great Depression, under which bank customers deposit a set amount of money ...
accounts, investment accounts, and
money market account A money market account (MMA) or money market deposit account (MMDA) is a deposit account A deposit account is a bank account A bank account is a financial account maintained by a bank or other financial institution in which the financial tra ...
s. Some savings accounts also have other special requirements, such as a minimum initial deposit, deposits made regularly, and notices of withdrawal.


Regulations


United States

In the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
, Sec. 204.2(d)(1) of
Regulation D (FRB) Reserve Requirements for Depository Institutions (, Regulation D) is a Federal Reserve The Federal Reserve System (also known as the Federal Reserve or simply the Fed) is the central banking system of the United States of America. It was cr ...
previously limited withdrawals from savings accounts to six transfers or withdrawals per month, a limitation which was removed in April 2020, though some banks continue to impose a limit voluntarily as of 2021. There is no limit to the number of deposits into the account. Violations of the regulation may result in a service charge or may result in the account being changed to a checking account. Regulation D sets smaller
reserve requirements Reserve or reserves may refer to: Places * Reserve, Kansas Reserve is a city in Brown County, Kansas, Brown County, Kansas, United States. As of the 2010 United States Census, 2010 census, the city population was 84. It is located approximate ...
for savings account balances. In addition, customers can plan withdrawals to avoid fees and earn interest, which contributes to more stable savings account balances on which banks can lend. A savings account linked to a checking account at the same financial institution can help avoid fees due to overdrafts and reduce banking costs.


High yield savings accounts

High yield savings accounts, sometimes abbreviated to HYSA, are a type of savings account with higher interest than normal savings accounts. These accounts typically earn 10 times more in interest than a normal savings account. HYSAs can be a good option for short-term investing.


References


External links


Savings Account Definition , Investopedia



What Is a Savings Account? , The Balance
Bank account Interest-bearing instruments {{Bank-stub