What is a savings account? (with photo)

Passbook savings accounts allow the account holder to view each transaction on paper.

A passbook savings account is a bank account that uses a specific type of record keeping method. With a savings account, the account holder keeps track of all transactions in a small notebook provided by the bank. The bank will check the balance against the balance recorded by the account holder for accuracy when the account holder visits the branch or at other times as requested.

While savings accounts aren’t for everyone, they can be an attractive option for people who don’t need to keep track of many different transactions on a daily basis. One of the benefits of a savings account is the slightly higher interest rates that some of these accounts offer. As consumers look everywhere for higher interest rates on deposits, savings accounts appear to be a potential solution, especially for those whose money doesn’t need to move often.

Savings accounts can be ideal for some of the younger depositors as well as some of the older ones. Parents can open a savings account for their child in order to help this young holder learn how to save money. Keeping track of the passbook account with the notebook provided helps the child improve their math and organization skills. For the elderly, the savings account can be a good alternative to deal with more advanced technologies or accounting methods.

The passbook savings account has been moved further towards the fringes of the financial world by new options like online banking. When someone with a savings account needs to keep track of their transactions on paper, online banking allows instant monitoring of all transactions from a savings account or checking account. Other disadvantages of a savings account include restrictions such as a minimum balance that banks can impose on the account holder.

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While so many depositors have switched to online banking, there may still be a demand for savings accounts in order to do “old-fashioned” banking. Individual consumers can ask their banks about savings account options and any other savings plans that come with a higher interest rate. Getting higher interest rates makes the money that is parked in savings grow at a faster rate, and looking for interest earning opportunities is part of the basic financial planning that professionals recommend for almost all savers.

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