Facts About Savings Accounts

Savings accounts are a type of account many people have. Savings accounts have an easy-to-remember interest rate and often come with other perks. You can deposit and withdraw money from a savings account anytime you want. You can transfer money between your savings account and another bank account with a different interest rate, like checking.

What is it?
A savings account is an easy way for you to save money. The interest rates on these accounts are lower than other bank accounts because there’s no penalty for withdrawing or depositing at any time. There are also no minimum or maximum balances and no fees. You can only get your money out of a savings account when you want to, which can be helpful if you don’t have much money.

A savings account is an easy way to put money away. A savings account can make that easy if you want to avoid going over budget and saving for something big. Several types of savings accounts are available, so you can choose the one that works best for your situation. Using a savings account for emergencies or unexpected expenses is a great idea because you don’t need to worry about paying fees. Having an emergency fund ready for any surprise expense will help keep your financial future secure. Financial experts at the Consumer Financial Protection Bureau (CFPB) recommend keeping three to six months of living expenses in a dedicated savings account as a financial safety net.

How do you get one?
There are several ways to open a bank savings account, from online or in-person to the ATM. Or you can find a place to open an account and give you the savings interest rate. The best way is to talk with your banker so they can determine what will fit your needs best. You must fill out an application or come into the bank to open the account. Many online banks like SoFi and Ally Bank allow you to open a savings account entirely online in minutes, often with no minimum deposit required, as noted by NerdWallet’s savings account reviews.

What is it designed for?
Savings accounts are a good investment because you can withdraw any amount of money in the account at any time. However, you cannot deposit more than your balance in your savings account. There are also no minimum balance requirements or fees for saving money in a savings account. If you put enough money into a savings account, you can get some of it back when you’re ready to withdraw, which helps protect against inflation. The CFPB explains that savings accounts are specifically designed to help consumers set aside funds they do not need for day-to-day spending while earning modest interest in return.

What can it be used for?
A savings account can be used for a lot of things. For example, you can save money for a home, car, vacation, or another major purchase. You can deposit a small amount of money into the account each week and watch as the balance grows. You could also use a savings account to start an emergency fund with just in case money. Having extra money in a savings account is useful if you want to keep some cash on hand. Finally, you could use your savings account as part of your budget and only spend what’s in the account each month or quarter. According to Bankrate’s savings research, more than half of Americans use a dedicated savings account specifically for emergency fund purposes.

How does it work?
A savings account has a great interest rate that allows you to save money for many things without keeping track of when you’re spending your money. There are some rules about opening and closing a savings account. You can’t deposit more than the balance in the savings account without incurring fees, but you can withdraw any amount at any time. The only thing limiting your withdrawals from your savings account is the amount in your account at any given time. Once you have accumulated enough money in one of these accounts, you can think about opening another one for different purposes. Interest is calculated using the account’s annual percentage yield, or APY, which the Federal Reserve defines as the effective annual rate of return after compounding is taken into account.

What kind of accounts are there?
There are many different savings accounts, including ones that let you automatically transfer money into them from other accounts each month and those that offer you an interest rate. You can also earn interest on credit cards, but you will have to pay interest if you cannot pay the balance in full each month. Savings accounts have some of the best interest rates out there, so keep this in mind as you compare loans and credit cards. Common types include traditional savings accounts, high-yield savings accounts, money market accounts, and certificates of deposit (CDs). Online banks such as SoFi, Ally Bank, and Marcus by Goldman Sachs have become well known for offering high-yield savings accounts with significantly better APY rates than traditional institutions, as tracked by Investopedia’s annual banking review.

How secure is it?
A savings account is very secure if you deposit your money into a bank with many assets and a good reputation for keeping customers’ money safe. It doesn’t matter how much you have in your savings account as long as it’s enough to cover any withdrawals. The bank will be responsible for protecting your money, and it will secure the funds in a vault in a safe place. The FDIC insures deposits at member banks up to $250,000 per depositor, per ownership category, meaning the vast majority of everyday savers are fully protected even if their bank fails, according to the FDIC’s official deposit insurance overview.

How do I know if the bank is good?
If you have been holding onto your money in a savings account for a long time, then there is supposed to be plenty of money backing up that account. The bank would protect your money by keeping it in its vault or safe. If you have a savings account and the bank runs into financial difficulty, then all the money will be frozen and protected by the Federal Deposit Insurance Corporation. You can verify whether your bank is FDIC-insured by using the FDIC’s BankFind tool, which lets you search any U.S. bank by name, location, or charter number. Credit unions offer similar protection through the National Credit Union Administration (NCUA), which insures deposits up to the same $250,000 limit.

Are there any risks?
Savings accounts can be risky because they don’t have very strict withdrawal rules. You can withdraw from a savings account whenever you want without worrying about paying any penalties or fees. It could lead to problems if you need that money for something important. For example, if you needed emergency surgery for your child and had your emergency fund in savings, you would need to either withdraw the money or give up on what is most important in your life. One important risk to understand is that if a savings account’s APY is lower than the current inflation rate, the purchasing power of your savings can actually decline over time in real terms, a factor the Bureau of Labor Statistics (BLS) tracks through its Consumer Price Index (CPI) reports. This is why comparing APY rates across institutions, including online banks like SoFi and Ally, is a smart financial habit.

Have you ever been charged fees?
If you have ever opened a savings account, you know banks will charge withdrawal fees. These fees can range from $5 to $25. Banks charge these fees to keep the balance in your account from getting too low and causing problems for their customers. Banks will also charge you a transfer fee if you are moving all of your money over to the bank, even if it’s just because they are opening an additional savings account or transferring money between two accounts. You can avoid these fees by asking to open a new savings account at another bank or transferring some funds over from another account. The CFPB’s bank account guide recommends always reviewing the fee schedule, sometimes called a deposit account agreement, before opening any savings account, since monthly maintenance fees, excessive withdrawal fees, and paper statement fees can quietly erode your balance over time.

Frequently Asked Questions

What is a savings account?

A savings account is a deposit account held at a bank or credit union that earns interest on your balance while keeping your funds accessible. It is designed for storing money you do not need for daily expenses, and deposits are insured up to $250,000 by the FDIC at member banks.

What is the average savings account interest rate right now?

As of April 25, 2026, the national average savings account APY is approximately 0.41%, according to FDIC rate data. However, high-yield savings accounts at online banks such as SoFi, Ally Bank, and Marcus by Goldman Sachs frequently offer rates ranging from 4.25% to 4.75% APY, significantly above the national average.

How is a savings account different from a checking account?

A savings account is intended for storing funds and earns interest, while a checking account is designed for everyday transactions such as paying bills and making purchases. Checking accounts typically offer little to no interest but come with debit cards and check-writing privileges. The CFPB recommends maintaining both account types for well-rounded personal financial management.

Is my money safe in a savings account?

Yes. Deposits at FDIC-member banks are insured up to $250,000 per depositor, per ownership category. Credit union deposits receive equivalent protection through the NCUA. No insured depositor has ever lost money due to a bank failure since the FDIC was established in 1933.

How many times can I withdraw from a savings account per month?

Federal Regulation D previously limited savings account withdrawals to six per month, but the Federal Reserve suspended this rule in April 2020. Many banks still enforce their own limits, however, and may charge an excess withdrawal fee of $5 to $15 per transaction beyond their internal threshold. Always check your bank’s deposit account agreement for specific terms.

What is the difference between APY and APR on a savings account?

APY, or annual percentage yield, accounts for the effect of compound interest over a full year, giving you a more accurate picture of what your savings will actually earn. APR, or annual percentage rate, does not factor in compounding. When comparing savings accounts, always use the APY figure, as it reflects your true earnings more accurately.

What is a high-yield savings account?

A high-yield savings account is a savings account that offers an APY significantly higher than the national average. These accounts are typically offered by online banks and fintech companies such as SoFi, Ally Bank, and Marcus by Goldman Sachs, which have lower overhead costs than traditional brick-and-mortar institutions. As of April 2026, competitive high-yield accounts offer APYs ranging from 4.25% to 4.75%.

How much money should I keep in a savings account?

Most financial experts recommend keeping three to six months of essential living expenses in a savings account as an emergency fund. The CFPB and many certified financial planners suggest this as a baseline. Beyond your emergency fund, additional savings goals — such as a home down payment or vehicle purchase — can be kept in separate savings accounts or higher-yield instruments like CDs.

Can a savings account affect my credit score?

Simply opening or maintaining a savings account does not directly affect your FICO Score or credit report, since deposit accounts are not reported to credit bureaus like Experian, Equifax, or TransUnion. However, some banks use ChexSystems — a consumer reporting agency for banking history — when you apply to open a new account, and a negative ChexSystems record can prevent approval.

Are there any fees associated with savings accounts?

Common savings account fees include monthly maintenance fees ranging from $4 to $12, excess withdrawal fees of $5 to $15, and paper statement fees. Many banks, including Chase and Bank of America, waive the monthly maintenance fee when account holders maintain a minimum daily balance, typically between $300 and $500. Online banks like SoFi and Ally Bank often charge no monthly fees at all.