Savings account

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A savings account is a bank account at a retail bank. Common features include a limited number of withdrawals, a lack of cheque and linked debit card facilities, limited transfer options, and the inability to be overdrawn. Traditionally, transactions on savings accounts were widely recorded in a passbook, and were sometimes called passbook savings accounts, and bank statements 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 over time. Several countries require savings accounts to be protected by deposit insurance 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 accounts, investment accounts, and money market accounts. Some savings accounts also have other special requirements, such as a minimum initial deposit, deposits made regularly, and notices of withdrawal.

Regulations[edit]

United States[edit]

An advertisement for an early 20th century Toledo bank for a 4% interest rate on savings accounts

In the United States, Sec. 204.2(d)(1) of Regulation D (FRB) 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.[1] 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 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.[2]

High yield savings accounts[edit]

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.[3][4][5]

References[edit]

  1. ^ "Banks Were Allowed to Give People More Access to Savings in the Pandemic". New York Times. Retrieved 13 August 2021.
  2. ^ Amy Fontinelle. "Banking: Savings Accounts 101".
  3. ^ Knueven, Liz. "The only difference between regular and high-yield savings that matters is the one that earns you 10 times more on your money". Business Insider. Retrieved 30 December 2020.
  4. ^ Gravier, Elizabeth (22 June 2020). "What a high-yield savings account is and how it can grow your money". CNBC. Retrieved 30 December 2020.
  5. ^ Karl, Sabrina. "What Is a High-Yield Savings Account?". Investopedia. Retrieved 30 December 2020.

External links[edit]