Savings Accounts

A savings account is a basic type of bank account that allows you to deposit money, keep it safe, and withdraw funds, all while earning interest. Savings accounts offer easy access to your funds. Once you’re ready to spend money, you can withdraw funds or transfer funds.

It’s generally wise to have a savings account, and they're mostly free—especially at online banks, community banks, and credit unions.

Keeping funds elsewhere that you don't plan to spend in the immediate future is unsafe, and using a savings account has a psychological benefit: It's tempting to spend money in hand. A savings account, however, can be a means of setting aside funds to reach longer-term goals.

Key Takeaways

Because savings accounts pay interest but keep your funds easy to access, they’re a good option for parking cash you’ll want in the short-term or to cover an emergency.
In exchange for the ease and liquidity that savings accounts offer, you’ll earn a lower rate than more restrictive savings instruments and investments might pay.
The amount you can withdraw from a savings account is generally unlimited.
The interest you earn on a savings account is considered taxable income.

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