Savings Accounts

A savings account is a fundamental tool of personal finance. Learn how these accounts work, how to shop for one, and how they can help your money work for you.

Frequently Asked Questions

  • What is a savings account?

    A savings account is a simple bank account that allows you to deposit money, keep it safe, and withdraw funds, all while earning interest on the amount deposited. Savings accounts offered by most banks, credit unions, and other financial institutions are insured by the government. Most banks limit the number of transactions you can make with a savings account, which can be a good thing if you’re trying to rein in spending and “save.”

  • What is a high-yield savings account?

    A high-yield savings account is a lot like a traditional savings account with one big exception: It offers higher interest rates. These accounts are commonly found at online banks, which means you sacrifice the convenience of branch banking. They may also require higher minimum deposits than regular savings accounts.

  • How does interest work on a savings account?

    When you lend money, you typically get your money back plus a little bit extra. That extra is the "interest," or your compensation for letting somebody else use your money. The same is true when you deposit funds into a savings account. Most savings accounts pay “compound interest,” which means you earn interest on the principal plus on any interest you have earned previously. You can calculate interest earned using our spreadsheet calculator.

  • What is the difference between a savings and a checking account?

    Savings accounts are designed to keep your money safe while paying a modest amount of interest on your account balance. Most banks will limit the number of transactions you can make with your savings account. A checking account is designed for frequent transactions, and you can use your money in a variety of ways—paper checks, electronic payments, debit cards, ATMs, and more.

  • How do you open a savings account?

    Most banks and credit unions make it pretty easy to open a savings account. In fact, the hardest part may be choosing a bank or credit union. Once that’s done, you provide the bank with some details, fund the account, and you’re on your way.


Key Terms

Woman reviewing finances
See How to Earn the Highest Rates on Your Money Market Account
Interest on savings fourmual
Interest Earned on Savings
A person uses a phone in a mall.
Savings Accounts vs. Checking Accounts: What’s the Difference?
Woman reviewing paper statements and online records
How to Use a Bank Statement (and Why You Should Be Reading Yours)
Person drinking coffee and looking out a window
Cryptocurrency Savings Account
Child holding a gift hugging her father who's wearing a Santa hat
Christmas Club Account
father sitting at desk trying to work with son on his lap crying
Individual Development Account
A couple going through paperwork at home
What Is a High-Yield Savings Account?
A illustration of a man with a watering can watering plants with dollar signs flowers to indicate the concept of growing savings
Where to Open a Free Savings Account
 A man deposits cash with a bank teller.
How To Switch Savings Accounts
Young woman talks about student loan with loan officer
Student Savings Account
Woman using an ATM
Cash Management Account
Businessman taking money at an ATM in the city.
Can You Write Checks From a Savings Account?
Client consulting with a agent
Daily Compound Interest Formula
Mother teaching daughter personal finances on bed
Options for Savings: From Basic Accounts to Savings-Like Alternatives
A person works on a computer.
Do Savings Accounts Have Withdrawal Limits?
A proposal on the beach
Wedding Savings Account
Headshot of Kristin Myers between illustrations of people, above the text "My Two Cents"
How Do I Earn Sizable Interest on My Savings Without Investing?
average-american-savings-rate
How Much Is In Your Savings Account?
An employee in business attire shows an information brochure to a customer.
Typical Minimum Balance for Traditional Savings Accounts
person in red and white striped shirt reviewing finances
How Many Savings Accounts Should I Have?
Person doing finances at home
Tiered-Rate Account
A woman banking via mobile app.
Microsavings Accounts
banking concept
These Are the Best Ways to Earn the Highest Savings Rates
Person using an ATM while carrying a child
How Old Do You Have To Be To Open a Savings Account?
A parent holds a child outside.
How To Get a Savings Account
Person with baby looking at account statement
Savings Accounts vs. Money Market Accounts: What’s the Difference?
Woman in a blue cable-knit sweater reviews paperwork at her home laptop.
Is Chasing a Better Bank Savings Rate Worth It?
Stack of money with a stethoscope
Preplan for Your Family's Healthcare Expenses With a HSA Account
A person fills out forms.
Bank Savings Accounts vs. Credit Union Savings Accounts
Banker meets with a client
How To Choose the Best Savings Account
Couple talking to a bank manager
Documents Needed To Open a Savings Account
Parent with child, looking at a phone
The Best Time To Open a Savings Account
Woman looking concerned while paying bills from home.
How Much Money to Keep Your Savings Account Depends on Your Situation.
Smiling couple reading from a smartphone together at home
Prize-Linked Savings Accounts
A group of students has a conversation around a table.
Can I Pay for College With a Savings Account?
A person works on a laptop outside.
How To Add Money to a Savings Account
How Much Money Should You Keep In a Savings Account
Are Savings Accounts Really Free or Should You Look for Hidden Costs?
average retirement savings by age
How to Shop for a Savings Account With the Highest Rate
Laughing mother holding infant on summer beach vacation
How To Save More Using a Vacation Savings Account
A family reuniting
The New Savings Account That Can Help You Save on Travel
Hiker overlooking a mountain
How to Build Your Savings While Earning Rewards
 
 
 
 

Page Sources

  1. Federal Deposit Insurance Corporation. "Are My Deposit Accounts Insured by the FDIC?"

  2. Investor.gov "What Is Compound Interest?"

  3. Bank of America. "Wire Transfers FAQs."

  4. Board of Governors of the Federal Reserve System. "Fedwire Funds Services."

  5. Nacha. "What Is ACH?"

  6. National Credit Union Administration. "Share Insurance Fund Overview."

  7. Federal Deposit Insurance Corporation. "About."