savings account

noun

|Updated on: 11 Jul 2018

Examples: savings account in a Sentence

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

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Examples of savings account in a Sentence

She opened a savings account.

Recent Examples of savings account from the Web

The Trues have two savings accounts and a Charles Schwab brokerage account to serve as first-retirement emergency funds and second-retirement supplements.

— rachel bachman, WSJ, "For Athletes, It’s Double Trouble to Plan for Retirement," 5 July 2018
Those who did have retirement savings accounts had a median balance of $17,000 — barely enough to cover half a year’s stay in long-term care.

— sarah gantz, Philly.com, "Mounting health costs a financial vise for boomers nearing retirement," 18 May 2018
Examples include letting patients deposit their Medicare and insurance premiums into health savings accounts that can be passed on to heirs or converted to cash upon death.

— elizabeth marie himchak, Pomerado News, "The 49th Congressional District has a crowded race," 16 May 2018
Previous topics have included health savings accounts and retirement planning.

— janice steinhagen, Courant Community, "Coupon Maven Offers High-Tech Tips For Extreme Couponing," 14 May 2018
Health savings accounts, which let people set aside tax-free money for medical expenses, would be expanded.

— stephanie armour, WSJ, "Conservatives Make New Push to Repeal Affordable Care Act," 19 June 2018
Consider increased contributions to retirement plans and health savings accounts or increasing advertising to fend off competition.

— NBC News, "What to do after you file your taxes," 18 Apr. 2018
The settlement is the latest fallout for Wells Fargo for creating unauthorized savings accounts, credit cards and lines of credit from May 1, 2002, to April 20, 2017.

— bloomberg, latimes.com, "Judge approves a $142-million settlement over the Wells Fargo accounts scandal, calling it 'rough justice'," 30 May 2018
Each chamber must pass the legislation by a three-fourths majority in order to fill a deficit of roughly $700 million with money from the state's main savings account, the Constitutional Budget Reserve.

— nathaniel herz, Anchorage Daily News, "From crime laws to construction spending, Alaska lawmakers did a lot in the past 48 hours. Here’s what you missed.," 11 May 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.

First Known Use of savings account

1850

in the meaning defined above

See Words from the same year

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Financial Definition of SAVINGS ACCOUNT

savings account

noun

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