What is a Savings Account?

A savings account is an account that allows you to store your money safely and earn interest. Savings accounts are a basic bank account that allows money to be deposited. It allows you to withdraw money when you need to.  Savings accounts are offered by many banks, credit unions and other financial institutions.

A savings account is a type of deposit account that you can use to save money and not spend it right away. Savings accounts are geared toward saving, and they allow you to save money for specific goals and purposes. For example, you could open a savings account for your emergency fund or just for general savings.

As an incentive to save money, many savings accounts offer interest. Money deposited earns interest which is then deposited back into your account. Financial institutions use savings and other deposit accounts to fund loans for their customers.

How do you open a savings account?

You can find savings accounts at almost every bank and credit union, including online banks. You can also find savings accounts at brokerage and investment firms.

For those banks and credit unions that offer savings accounts, you can visit a branch or open an account online. It normally will not take very long to open an account.  Different institutions may have different requirements, so check first.  Your name, address, telephone number, and photo identification will also likely be required. You will also need to provide your Social Security Number.

It is a good idea to compare different accounts for the best rates, requirements, and features.  The interest rates on savings accounts can vary by account and institution, so check around for the best rates. Banks and credit unions can change their rates at anytime, so try and understand how they change their rates and if there are any promotions that they may be offering.

For funding the account, some institutions require that you make a minimum deposit when you open an account. Others allow you to fund it later.

What is the cost of savings accounts?

Savings accounts are often  free but there are some limitations and potential costs. You’ll likely need to keep a minimum balance in the account. If you don’t maintain the minimum balance, banks may charge a monthly or annual fee. If your account balance falls below zero, additional fees will likely be taken from your account though some banks reduce minimum deposits for students.  Make sure you are aware of any of these requirements before opening your account.

Saving accounts are a good idea for many reasons, including the possibility of earning interest. Savings accounts are a safe place to store your money. You can make sure that you have enough money to meet your savings goals by opening a savings account, and then making regular deposits.

Categories Banking, Personal Finance, Saving Money

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