Savings Account


DEFINITION of 'Savings Account'

A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate. Depending on the specific type of savings account, the account holder may not be able to write checks from the account (without incurring extra fees or expenses) and the account is likely to have a limited number of free transfers/transactions. Savings account funds are considered one of the most liquid investments outside of demand accounts and cash. In contrast to savings accounts, checking accounts allow you to write checks and use electronic debit to access your funds inside the account. Savings accounts are generally for money that you don't intend to use for daily expenses. To open a savings account, simply go down to your local bank with proper identification and ask to open an account.


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BREAKING DOWN 'Savings Account'

Because savings accounts almost always pay lower interest rates than Treasury bills and certificates of deposit, they should not be used for long-term holding periods. Their main advantages are liquidity and superior rates compared to checking accounts. Most modern savings accounts offer access to funds through visits to a local branch, over the internet and through automated teller machines.

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  1. Can mutual funds outperform savings accounts?

    A mutual fund can – and should – outperform a savings account. In most cases, it should not even be a close race. Savings ... Read Full Answer >>
  2. What are the requirements for opening a savings account in the United States?

    Nearly half of all Americans use a savings account with a bank or credit union as a personal savings vehicle. A savings account ... Read Full Answer >>
  3. How are bank reserve requirements determined and how does this affect shareholders?

    In economics, required reserves play an important role in ensuring the stability of banks and how a central bank conducts ... Read Full Answer >>
  4. What economic factors affect savings account rates?

    At a basic economic level, the interest rate set on savings account deposits is determined by the relationship between how ... Read Full Answer >>
  5. How much money should I have in a savings account?

    Most financial advisers or budgeting experts recommend that individuals and households keep enough money in liquid savings ... Read Full Answer >>
  6. How do I calculate compound interest using Excel?

    In simple terms, compound interest is interest on interest. It is the interest that accumulates on the principal deposit. ... Read Full Answer >>
  7. What are the most popular assets for investors?

    Popular asset classes for investors includes savings accounts and bonds, marketable bonds, certificates of deposit, equity-based ... Read Full Answer >>
  8. What determines the interest rate in my money market account?

    A money market account can provide a safe place to set aside liquid funds that you may need to access in the event of a financial ... Read Full Answer >>
  9. What's the difference between a savings account and a Roth IRA?

    A savings account is an all-inclusive term , which includes IRAs and regular ( non-retirement) savings. A Roth IRA is a savings ... Read Full Answer >>

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