Define: Savings Account

Quick Summary of Savings Account

An account with a bank or financial institution which pays interest on balances held, usually once or twice per year, the amount of interest usually depending on to the amount of money in the account and the ‘base rate’ of the Bank of England. There is often a notice period required for withdrawals and in most cases the longer the notice period, the higher the interest rate.

A savings account is an account held at a bank or credit union in which the interest rate paid to the account holder is typically higher than that of a checking account, but lower than that of less liquid assets, such as bonds or certificates of deposit (CD’s).

A savings account does not have the advantage of check writing one would enjoy with a checking account, and has some withdrawal limits, but the principal is protected by FDIC insurance, and the money can be accessed in other ways, such by linked overdraft protection to a checking account or ATM card.

Disclaimer

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This glossary post was last updated: 29th March, 2024.