Savings Account
A bank deposit account that earns interest and is designed for storing funds not needed immediately.
What is Savings Account?
A savings account is an interest-bearing deposit account at a bank or credit union, intended for funds the depositor does not need for immediate spending. Savings accounts earn interest — expressed as the annual percentage yield (APY) — and are FDIC-insured up to $250,000. Unlike checking accounts, federal Regulation D historically limited savings accounts to six withdrawals per month (this restriction was suspended in 2020 but many banks maintain their own limits). High-yield savings accounts (HYSAs) offered by online banks often pay significantly higher APYs than traditional banks.
Example
A traditional bank savings account might pay 0.01% APY, growing $10,000 to $10,001 in a year. A high-yield savings account at 4.50% APY grows the same $10,000 to $10,450 — a 45x difference in interest earned.
Source: FDIC — Consumer Protection