What is a savings account & how does it work?

A savings account is a deposit account that typically earns interest, is federally insured and held at a financial institution, such as a bank or credit union. With an interest-bearing account, the bank pays you to keep your funds deposited, with annual percentage yields on some accounts reaching over 5%.

What are the benefits of a savings account?

The benefits of a savings account include liquidity, safety, and the potential to earn income through interest. With quick access to funds and FDIC insurance, your money is protected even in the event of a bank failure. While the interest rates may not be as high as other investments, savings accounts provide a no-risk return on your money.

How do you open a savings account?

You’ll open a savings account at a bank or credit union, either online or in person, similar to opening a checking account. Provide the institution with personal information and then deposit money into the account. Simple, right? Once you’ve made a deposit, the money in your savings account will begin to earn interest.