Savings account

A savings account is a deposit account offered by a bank or credit union. It holds money set aside from daily spending and pays interest on the balance. The money stays accessible, so the account holder can move funds to a checking account or withdraw them when needed.

The bank lends deposited funds to other customers and pays interest in return. Interest rates on savings accounts are variable, which means the bank can raise or lower them. Some accounts limit the number of certain withdrawals or transfers per month.

Balances at a bank are insured by the FDIC, and balances at a credit union are insured by the NCUA, each up to the limits set by law. That insurance protects deposits if the institution fails. Because rates can change, the interest earned is not fixed and may not keep pace with inflation.