Deposit Accounts: Understanding Savings Accounts

by Amy Lillard

(2/23/2013) Savings accounts are one of the simplest ways to set money aside, whether it’s for an emergency fund, unexpected home or car repairs, or even vacations. Convenient and safe, savings accounts provide a place to store your money and earn a nominal amount of interest in the process.

In contrast to other types of deposit accounts like Certificates of Deposit or Money Market Accounts, savings accounts are a flexible and accessible home for money set aside. These accounts are liquid, meaning you can obtain your money when needed without monetary penalty. This fact makes the accounts an ideal place for money that may be necessary soon or at a moment’s notice.

Savings accounts can be established with a low amount of money, and most require a small minimum balance to avoid maintenance fees. There is usually little or no limitations on how much you can contribute over time. Federal regulations do require that savings accounts restrict withdrawals to a few per month or calendar year, and each individual bank may have further rules.

When it comes to choosing a savings account, many opt to use the bank or credit union in which they have a checking account. Consumers will often set up automatic transfers to savings to simplify their savings process.

However, today there are a wider variety of options to choose from, and the competition means a wider variety of interest rates to increase your yield. So-called “high-yield savings accounts” are often found online, and pay higher interest rates than traditional banks or credit unions. They can be just as convenient, linking to your other accounts in order to transfer money, and maximizing the amount you save.

Overall, savings accounts are a simple and accessible place to store money you may need at any time, and earn a small bit of interest at the same time. They’re also a reliable and safe method, as the only savings deposit account thatt is protected by the Federal Deposit Insurance Corporation.

For Additional Reading:

Smart Banking and Savings Basics: http://money.cnn.com/magazines/moneymag/money101/lesson3/index.htm

What Do I Need to Know About Savings Accounts? http://www.getrichslowly.org/guide-to-money/save/savings-accounts/what-do-i-need-to-know-about-savings-accounts

How to Choose and Open and Personal Savings Account: http://www.moneymanagement.org/budgeting-tools/credit-articles/savings/how-to-choose-and-open-a-personal-savings-account.aspx

In recent years, the landscape of savings accounts has evolved significantly, with fintech companies and online banks entering the market, offering even more competitive interest rates and innovative features like automated savings tools and no-fee policies. This has made it easier for consumers to find an account that not only helps their money grow but also suits their specific financial habits and goals.

Moreover, with the advent of mobile banking, managing a savings account has become more convenient than ever, allowing users to deposit checks, monitor their balances, and transfer funds between accounts all from their smartphone. As the financial environment continues to change, it's important for savers to stay informed about the latest offerings and trends to make the most of their savings strategy.