What Is a Regular Savings Account?

A regular savings account is a type of bank account used to safely store your money while earning some interest. Savings accounts generally have restrictions on the number of transactions you can make per month. Alternatives to savings accounts include checking accounts, money market accounts and certificates of deposit.

Savings Account Definition

A savings account is a type of bank or credit union account where you can store money securely while earning some interest. In the United States, the Federal Deposit Insurance Corporation insures bank deposits up to $250,000.

You can open a savings account with pretty much any bank. Generally, federal law limits you to six transfers per month in or out of a savings account, though you may be able to make additional transfers using an automated teller machine or human teller. Check with your bank to make sure you understand the rules of any account.

Choosing a Savings Account

Different banks have different policies regarding fees, interest and minimum balances for savings accounts. For example, the opening amount for an HDFC account may be very different from the opening amount for a Chase account.

Shop around to find a bank offering a savings account at terms you like, based on how much you intend to keep in the account and how you intend to use it. For convenience, you might decide to open a savings account with an institution where you already have a checking account or credit card.

You might also consider whether a bank has branches near where you live or work, how well its online and mobile banking offerings meet your needs and how easy it is to reach someone for assistance by phone.

Understanding Checking Accounts

While a savings account is intended for saving money, a checking account is intended more for day-to-day transactions. You'll often use your checking account to deposit your pay, write checks, spend using a debit card and make ATM withdrawals.

Most checking accounts don't limit how many transactions you can make per month, though some may charge for checks or for use of other banks' ATMs. Some banks charge fees for checking accounts, though these charges are often waived if you maintain a certain minimum balance or receive direct deposits into the account.

Some checking accounts do pay interest, though it's usually not as much as on a savings account or another type of account.

Money Market Accounts

A money market account is a type of bank account with some properties of a regular savings account and some properties of a checking account.

Money market accounts generally do have a limit on the number of transactions you can make per month, but they also often offer checking-like features such as checkbooks and debit cards. The name comes from the fact that banks invest deposits in these accounts in short-term government and corporate debt through what are known as money markets.

Money market accounts sometimes pay better interest than regular checking and savings accounts, especially if you maintain a minimum balance. The FDIC insures them like regular checking and savings accounts.

Some brokerages also offer similar products known as money market funds, which are mutual funds making similar investments and paying similar interest rates. The FDIC doesn't insure them, so it is possible to lose money in a money market fund, though they're generally considered low-risk investments.

Certificates of Deposit

A certificate of deposit is another type of bank account where you agree to keep your funds in the account for a minimum amount of time in exchange for locking in a higher rate of interest.

You generally will pay a penalty if you withdraw your funds before the account matures, or reaches the end of its term. Some banks offer special CDs where you can boost your interest rate or contribute additional funds while the account is active.

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About the Author

Steven Melendez is an independent journalist with a background in technology and business. He has written for a variety of business publications including Fast Company, the Wall Street Journal, Innovation Leader and Ad Age. He was awarded the Knight Foundation scholarship to Northwestern University's Medill School of Journalism.