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 Trump administration has directed federal agencies to see if HRA accounts and health savings accounts (see below) can be used as vehicles to overcome the current regulatory obstacles. Marie Fishpaw, National Review, "A Health Plan for President Trump," 1 Aug. 2019 As the Fed raises rates, banks typically turn around and given savers a better return, but so far, banks have been slow to bump up their savings account and CD rates. Heather Long, chicagotribune.com, "A new era: What the Federal Reserve's interest rate hike means for you," 21 Mar. 2018 Savers are unlikely to see a big drop in rates because savings accounts, particularly at the big banks, still pay rates that are much lower than what the Fed offers banks. Stephen Gandel, CBS News, "Federal Reserve lowers interest rates for first time in more than a decade," 31 July 2019 Candidates and lawmakers are only required to post ranges for their assets — such as savings accounts, stock portfolios and rental properties — and liabilities, such as student loans, mortgages and other debts. Jennifer Haberkorn, latimes.com, "Freshman House class brings less wealth and different economic perspective to Congress," 2 July 2019 Trump's executive order also calls for: —expanded uses for health savings accounts, a tax-advantaged way to pay health care bills that has long been favored by Republicans. NBC News, "Trump order aims to disclose 'real' costs for health care," 24 June 2019 That clause prevents 54 specific savings accounts from being automatically drained into the Constitutional Budget Reserve at the July 1 start of the fiscal year. James Brooks, Anchorage Daily News, "With big questions remaining, Alaska Legislature’s second special session set to quietly end Tuesday," 6 Aug. 2019 Most big banks are still paying interest rates on savings accounts that are pretty close to zero, according to Richard Barrington, senior financial analyst at Moneyrates.com. Stephen Gandel, CBS News, "What a Fed move to cut interest rates would mean for your wallet," 31 July 2019 Unlike savings accounts which allow a maximum of six withdrawals per month, there are unlimited withdrawals available in Better Everyday Savings. Janna Herron, USA TODAY, "Betterment jumps into savings war with 2.69% APY. Checking is next.," 23 July 2019

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

12 Sep 2019

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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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Rhyming Dictionary: Words that rhyme with savings account

Spanish Central: Translation of savings account

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