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

The federal government will start dipping into its Social Security savings account this year to help pay retirement benefits to millions of Americans. Alexia Fernández Campbell, Vox, "Why baby boomers need immigrants to fund their retirement, in 2 charts," 1 Aug. 2018 One initial priority is expanding educational saving accounts and developing technologies that would let parents pick and choose private classes or tutors for their kids the same way people shop on Amazon. James Hohmann, Washington Post, "The Daily 202: Koch network laying groundwork to fundamentally transform America’s education system," 30 Jan. 2018 Enrollees must make contributions to a health savings account, on a sliding scale based on income, to qualify for full benefits. New York Times, "Finally, Some Answers on the Effects of Medicaid Expansion," 2 July 2018 The remaining deficit will be filled out of the Constitutional Budget Reserve savings account, which held $2.3 billion on June 30, according to the Revenue Department. Author: Elwood Brehmer, Anchorage Daily News, "Despite slight production dip, Alaska oil revenue grows in FY18," 13 July 2018 Most people aren't at a loss for ideas on how to spend a cash windfall. With bills to pay, savings accounts to fortify and even the most modest of vacations to plan, the dilemma is deciding what to drop from the list. cleveland.com, "5 great ways to invest your tax refund (NerdWallet)," 27 Apr. 2018 Rates for basic savings accounts have been anemic for years, but that may change as the Federal Reserve proceeds with its plans to raise benchmark rates. Ann Carrns, New York Times, "How Saving Some of Your Tax Refund Could Win You a Cash Prize," 16 Mar. 2018 DeSantis recently prosecuted a 60-year-old woman, a decades-long con artist, who forced an 87-year-old South Philadelphia woman into a bank to withdraw $600 — her entire savings account. Erin Arvedlund, Philly.com, "Philly DA Krasner's new unit to prosecute elder financial abusers," 22 June 2018 The men in the survey expressed a greater willingness to bet on exotic investments like Bitcoin and other cryptocurrencies to boost returns in their retirement savings accounts, such as 401(k)s and IRAs. Adam Shell, USA TODAY, "401(k) investing: How Millennial men and women invest differently," 12 June 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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First Known Use of savings account

1850, in the meaning defined above

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Last Updated

14 Nov 2018

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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

English Language Learners Definition of savings account

: a bank account in which people keep money that they want to save

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