What is a Savings Account?

 

What is savings account?

A savings account is an account for storing money while you earn some interest from it.

But how much interest do I make from a savings account?

It changes from time to time, but in 2018, it is 0.1% – 1.5% per year depending on the bank.

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That’s really low interest… So what’s the point of having a savings account?

Well, first of all, your money is absolutely safe and can be stored for short to medium term goals, like a down payment for a house or a car, or it can be used for an emergency fund.

Can I deposit money from my piggy bank in a savings account?

Yes, you can – it would be a lot safer there, and it would earn some interest.

How many savings accounts can I have?

Well, you can have any number you want!

Can I move money from one savings account to another savings account, or even to a checking account?

Yes, you can do that. But usually, there is a restriction on the number of times that can be done in a month.

Who should have a savings account?

Well, anyone who is saving for short to medium term goals and needs a safe way to earn some interest. And anyone that’s also building an emergency fund.

Is there any fee associated with a savings account?

Yes, most banks have $5-$10 monthly fee. But that can be waived if a minimum balance is maintained. Depending on the bank, the minimum balance is usually $300-$500.

The fee could also be waived if the savings account is linked to a checking account.

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But how do I open a savings account?

It’s very easy to open a savings account. You can do it by visiting the bank’s branch, or you can do it online. You just need your social security number and a photo ID, like your driver’s license.

But how do I choose a savings account? Like, are some better than others?

You should pick a bank that is FDIC insured, just for safety. And you should also look for high interest. And also if you can, choose a savings account with no monthly fees.

Whoa… That’s a lot about a savings account! Thank you very much for telling me what a savings account is.

You’re welcome Sooper Cooper. Remember, finance is your friend!

Podcast: What is a Savings Account

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