What is a Savings Account?

This is a very elementary question.  But, do you really understand what is a savings account?  We all think we do, but sometimes it is good to look at the definition to truly understand a term.

Dictionary.com defines a savings account as a bank account on which interest is paid, traditionally one for which a bankbook is used to record deposits, withdrawals, and interest payments.

Therefore a savings account is an investment vehicle maintained by a financial institution which is typically a bank.  Savings account depositors deposit their savings into these savings accounts in order to have a safe place to keep their money and to earn interest.

Savings accounts have always been known as one of the safest places to deposit money.  Most of the financial institutions in the United States who offer savings accounts are FDIC insured.  This FDIC insurance gives savings account owners and depositors protection by guaranteeing that the funds will be available for withdrawl whenever the money is needed.

Here at Smart Savings 101 we like to find savings account high interest.  However, if you are solely looking for a safe place to put your money, then any FDIC insured savings account will do.

Now we will never have to ask what is a savings account.