DEFINITION of 'Microsavings'

A branch of microfinance, consisting of a small deposit account offered to lower income families or individuals as an incentive to store funds for future use. Microsavings accounts work similar to a normal savings account, however, are designed around smaller amounts of money. The minimum balance requirements are often waived, or very low, allowing users to save small amounts of money and not be charged for the service.

BREAKING DOWN 'Microsavings'

Microsavings plans are usually offered in developing countries as a way to encourage saving for education or other future investment. People who invest in these plans are better prepared to cope with any unforeseen expenses, which would usually harm lower income individuals.