A savings account is a type of bank account that allows individuals to deposit their money and earn interest on their balance. These accounts are typically held at a bank or other financial institution and are federally insured up to $250,000 per account owner. Some common features of savings accounts include:
- Limited Withdrawals: Savings accounts often have a limited number of withdrawals allowed per month.
- No Check or Debit Card Facilities: Unlike checking accounts, savings accounts typically do not come with check or debit card facilities.
- Limited Transfer Options: Savings accounts may have limitations on how often you can transfer funds.
- Cannot Be Overdrawn: Savings accounts generally do not allow you to overdraw your account.
Savings accounts are a good option for individuals who want a safe place to hold their cash and earn interest on their balance. They are also a good option for building an emergency fund, saving for a short-term goal, or simply sweeping surplus cash from a checking account so it can earn a little interest. While savings accounts typically pay only a modest interest rate, their safety and reliability make them a good option for parking cash that you want available for short-term needs.
