Savings Accounts
Learn all there is to know about savings accounts from regular passbook to high yield to HSAs. Discover where to get the best interest rates, how they are taxed, and how a savings club works.
Savings Accounts
Frequently Asked Questions
-
A savings account is considered high-yield if it pays more than a financial institution’s regular demand deposit or passbook savings accounts. High yield savings accounts are typically money market savings accounts that are limited to six withdrawal transactions per month.Learn More What Is a High-Yield Savings Account?
-
Interest earned on savings accounts is reported to the IRS by commercial banks and other financial institutions and therefore is subject to federal income tax as regular income. Interest is reported on Form 1099 to bank customers, typically in January each year for the previous tax year.Learn More How Is a Savings Account Taxed?
-
Both savings accounts and Roth IRAs are funded with after-tax dollars by individual investors. However, unlike savings accounts, any capital appreciation earned with a Roth IRA is not subject to federal income tax. Growth in savings accounts, in the form of interest, is subject to taxation.
-
Simple interest for a savings account is calculated by multiplying the account balance by the stated interest rate and then multiplying by the time period the money is in the account. Interest = Principal amount X Interest Rate X Time Period.Learn More How Interest Rates Work on Savings Accounts
-
A savings account is different from a checking account in that it is meant for accumulation of funds and earning interest rather than being a transaction account accessible with checks and debit cards. Savings accounts can be freely accessed by the account holder through deposits and withdrawals on demand and generally pay higher interest than checking accounts but are not designed for payment transactions.
Key Terms
- Savings AccountA savings account is a deposit account held at a bank or other financial institution that pays interest on the balance held in the account. Interest rates are typically modest but these accounts provide safety for emergency funds and savings needed for long-term needs.
- Deposit Interest RateThe deposit interest rate is the rate paid by banks and other financial institutions to deposit account customers in exchange for the use of their deposits to make loans. Deposit accounts include passbook savings, high-yield savings accounts, and certificates of deposit accounts.
- Sweep AccountA sweep account is a specialized account that is often attached to a brokerage account to automatically transfer or sweep cash funds into a low-risk, higher interest-earning investment such as a money market fund at the close of each business day.
- Passbook LoanA passbook loan is a loan made to a savings account owner or depositor by the bank holding the funds. The savings account balances serve as collateral for the personal loan, which is also called a pledged asset loan.
- Linked Savings AccountA linked savings account is a deposit account connected to another account such as a checking or brokerage account. Linked savings accounts are usually held by the same financial institution as the customer's other accounts, facilitating efficient and timely transfer of funds between accounts.
- Joint AccountA joint account is a type of deposit account that is held by two or more people, often spouses. Joint accounts are generally checking or savings accounts where both parties can make account transactions like deposits and withdrawals individually.
How Many Savings Accounts Should I Have?
Tiered-Rate Accounts: Examples of How They Work
How to Close a Savings Account
Best Free Savings Accounts
Best Savings A♛ccounts for Kids and Teens for May 2024—Rates Up to 7%
How Is a Savings Account Taxed?
Sweep Accounts Definition: Type🐭s and How They Work
The 5 Best Alternatives to Bank Savings Accounts
Term Deposit vs. Demand Deposit: What's the Difference?
How Foreign🌊ers Can Open Savings Accounts in the U.S.
Annual Equiv🐟alent Rate (AER)ꦛ: Definition, Formula, Examples
Current Accountও Savings Account (CASA): Definition and Formu🦋la
Transaction: What it Means, How it Works, Example
Savings Acℱcount vs. Roth IRA: What’s the Differen♚ce?
Money Market Fund vs. M♏MA vs. Savings Account: What’s the Difference?
Medical Savings Account (MSA): Meaning, Histꦉory, Types
F﷽oreign Savings Acco🍬unt: What it Means, How it Works
H▨ow to Open a Swiss Bank Account and Advantages in Having One
4 Savings Accounts for Investors
Individual Development Account (IDA): What iꦇt is, How it Works
CDs vs. MMAs vs. Savings Accounts
Chase Savings Account Interest Rates: May 2024
IBAN vs. SWIFT Code: What's the Difference?
Deposit Interest Rate: Definition, Fixed Vs. V♋ariable
Bank of America Savinꦬgs Account Interest ♒Rates: May 2024
Why Cho🍒ose a Moꦗney Market Account Instead of a Savings Account?
Negotiable Order ♒of Withdrawal Account: Overview, History
Wells Fargo S🦩avings Account Inꦦterest Rates: May 2024
ܫPassbook Loan:♈ Meaning, How it Works, Pros and Cons
Linked Savings Account: Meaning, Benefits, FAQs
Capital One Savings Account Interest Rates: May ༺🦹2024
USAA Savings Account Interest Rates: May 2024
Citibank Savings Account Interest Rates: May 2024
Fidelity Cash Management Account In🥀terest Rates: May 2024
Ally Savings Account Interest Rates: May 2024
TD Bank Savings Account Interest Rates: May 2024
SoFi Savings Account Interest Rates: May 2024
Discover Savings Account Interest Rates: May 2024
American Express Savings Account Interesꦐt Rates: May 2024
Best Savings Account Bonuses for May 2024
Christmas Club: Overview, History, Example
E*TRADE Savings Account Interest Rates: May 2024
Apple Bank Savings Account In💮terest Raꦅtes: May 2024
Marcus Savings Account Interest Rates: May 2024
Barclays Savings Account Interest Rates: May 2024
Charles Schwab Savings Account ꦬInterest Rat👍es: May 2024
U🦋.S. Bank Savings Account Interest Rates: May 2024
State Farm Sꦰavings Account Interest Ratꦆes: May 2024
LendingClub Savings Account Interest Rates: M🔜ay 2024
What Is a Savings Account and How Does It Work?
Joint
Employee ♓Contribution Pla🍒n: Meaning, Design, Popularity
How Does a Thrift Savings Plan (TSP) Work?
Savings Club
Health Savings Account (HSA) Rules and Limits