{"id":96,"date":"2022-03-25T10:47:14","date_gmt":"2022-03-25T10:47:14","guid":{"rendered":"https:\/\/compoundingstacks.com\/?p=96"},"modified":"2022-04-04T15:04:03","modified_gmt":"2022-04-04T15:04:03","slug":"what-is-a-savings-account-and-how-does-it-work","status":"publish","type":"post","link":"https:\/\/compoundingstacks.com\/what-is-a-savings-account-and-how-does-it-work\/","title":{"rendered":"What Is A Savings Account And How Does It Work?"},"content":{"rendered":"\n

What is a savings account, and how does it work? The term savings accounts refer to a type of bank account where you deposit money into an account and then withdraw the amount at a later date. <\/p>\n\n\n\n

\"What<\/figure><\/div>\n\n\n\n

This type of account is usually offered by banks or other financial institutions. <\/p>\n\n\n\n

Savings accounts are a great way to save money for future expenses and this is why we look at savings accounts in closer detail in this article, including their benefits and restrictions and how exactly one works within a bank or credit union. <\/p>\n\n\n\n

Let’s jump in.<\/p>\n\n\n\n

What Is A Savings Account?<\/strong><\/h2>\n\n\n\n

A savings account is a type of bank account that allows you to deposit money into the account and then withdraw the funds at a later time. <\/p>\n\n\n\n

The name \u201csavings\u201d comes from the fact that the money deposited into the account will be available to use when needed. <\/p>\n\n\n\n

You may also hear people refer to these types of accounts as checking accounts because they’re similar to regular checking accounts. However, there are some key differences between them.<\/p>\n\n\n\n

The main differences between a savings and a checking account are :<\/p>\n\n\n\n

1. Money deposited into a savings account is not immediately available. Instead, you must wait until the end of each month before withdrawing any money.<\/p>\n\n\n\n

2. Withdrawing money from a savings account requires more paperwork than with a checking account.<\/p>\n\n\n\n

3. Interest rates on savings accounts tend to be lower than those on checking accounts.<\/p>\n\n\n\n

4. Checking accounts typically have higher minimum opening balances than savings accounts.<\/p>\n\n\n\n

5. There are no overdraft fees associated with savings accounts.<\/p>\n\n\n\n

6. Savings accounts do not require monthly statements like checking accounts.<\/p>\n\n\n\n

7. Some savings accounts come with insurance against theft.<\/p>\n\n\n\n

8. Many savings accounts are FDIC insured.<\/p>\n\n\n\n

9. Most savings accounts are subject to federal taxation.<\/p>\n\n\n\n

10. Saving money in a savings account gives you the option to make withdrawals at any time during the year.<\/p>\n\n\n\n

Opening A Savings Account<\/strong><\/h2>\n\n\n\n

You can open a savings account with any bank or credit union. To do so, visit their website and click on the link to open an account. <\/p>\n\n\n\n

Once you’ve done this, you’ll need to fill out a form and provide information about yourself (like your address) and the institution you want to open the account with. <\/p>\n\n\n\n

After filling out the form, you’ll have to wait until your application is approved before you can access the funds. <\/p>\n\n\n\n

Some banks charge fees for opening a savings account. These fees range anywhere from $10-$25 and typically depend on the size of the account. <\/p>\n\n\n\n

If you don’t mind paying these fees, you should consider opening a savings account to keep your money safe and your money growing. <\/p>\n\n\n\n

Benefits Of Opening A Savings Account<\/strong><\/h2>\n\n\n\n

Savings accounts offer many benefits. Here are just a few:<\/p>\n\n\n\n