savings account

noun

Definition of savings account

: an account (as in a bank) on which interest is usually paid and from which withdrawals can be made usually only by presentation of a passbook or by written authorization on a prescribed form

Examples of savings account in a Sentence

She opened a savings account.

Recent Examples on the Web

Another step that can save you money is to make a contribution to a health savings account. — Ann Carrns, New York Times, "Tax Dawdlers, It’s the Last Minute. Here Are Tips on Filing.," 13 Apr. 2018 His American Opportunity Accounts Act would give each child born in the United States a savings account with $1,000. — Sarah Kliff, Vox, "An exclusive look at Cory Booker’s plan to fight wealth inequality: give poor kids money," 22 Oct. 2018 Big familiar names include American Express National Bank, Marcus (the online savings account of Goldman Sachs GS -3.60% ) and Barclays Bank, all of which are paying 1.9%. — Eric Uhlfelder, WSJ, "How to Find Decent Yields on Savings," 7 Oct. 2018 More Money: How to find best interest rates on CDs, savings accountsWorking in tech stocks’ favor now is strong earnings. — Adam Shell, USA TODAY, "Tech’s rising influence on 401(k) plans: pros and cons of tech's swelling weight in S&P 500," 6 June 2018 UpIt is a cash-back partnership that links your shopping to a home savings account. — Sara Rodrigues, House Beautiful, "Should Your Friends Crowdfund The Down Payment On Your Home? This Start-Up Thinks So," 18 Dec. 2018 Lawmakers also agreed to use money from the constitutional budget reserve, a state savings account, to help fill the deficit. — Becky Bohrer, The Seattle Times, "Alaska Legislature passes budgets, ends extended session," 13 May 2018 Williams, who has three stepchildren and five grandkids, depends on an automated savings account. — Carmen Wong Ulrich, Good Housekeeping, "Spend Less, Give More," 15 Nov. 2011 The House bill would create a new type of universal savings account, where money would grow tax-free and could be used for nonretirement purposes. — Richard Rubin, WSJ, "Leftover Tax Provisions Sit on Congress’s Post-Thanksgiving Plate," 23 Nov. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'savings account.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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savings and loan association

savings bank

savings bank life insurance

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Last Updated

21 Feb 2019

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Time Traveler for savings account

The first known use of savings account was in 1850

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More Definitions for savings account

savings account

noun

Financial Definition of savings account

What It Is

A savings account is a low-risk, interest-bearing deposit with a bank or other financial institution.

How It Works

Technically, savings accounts are time deposits, meaning that a bank can require the account holder to give notice before withdrawing the funds or impose a penalty for withdrawal before a specified date. Banks do not generally exercise this right, but institutions restrict the number of transactions allowed in and out of a savings account per month. Also, they may charge fees that vary with the average balance in the account. Institutions do not usually provide checks for savings accounts.

The interest rates on savings accounts vary by institution but are generally lower than interest rates on longer-term deposits, such as CDs or money market accounts. Interest is usually compounded monthly.

It is important to note that the interest rate paid on a savings account may be below the inflation rate, meaning that the account actually might lose purchasing power over time despite the interest earned.

Aside from the traditional savings account described here, the United States and other countries allow certain people to open special savings accounts, such as Health Savings Accounts or Coverdell Education Savings Accounts. Investors use these unique savings accounts to pay for specific items and they have special rules and tax implications.

Why It Matters

Savings accounts are conservative, low-risk investments because the Federal Depository Insurance Corporation typically insures the accounts (up to a limit) and account owners can access their funds easily. For these reasons, the interest rate on savings accounts tends to be lower than riskier or longer-term investments such as CDs, mutual funds, or corporate bonds.

Source: Investing Answers

savings account

noun