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Saving with Savings Accounts


Many institutions offer more than one type of savings account -- for example, passbook savings and statement savings. With a passbook savings account, you receive a record book in which your deposits and withdrawals are entered to keep track of transactions on your account; this record book must be presented when you make deposits and withdrawals. With a statement savings account, the institution regularly mails you a statement that shows your withdrawals and deposits for the account.

Savings accounts at federally insured depository institutions are protected by federal deposit insurance. Generally, the government protects the money you have on deposit to a limit of $100,000.

Account features and fees vary from one institution to the next In shopping for an account, it's important to look closely and compare features. Here are some of the most common features to compare:

Interest Rate
What is the interest rate? Can the institution change the rate after you open the account? Does the institution pay different levels of interest depending on the amount of your account balance, and, if so, in what way is interest calculated?

Interest Compounding
How often is interest compounded? Daily? Monthly? (In other words, how often account?)

Fees
Will you pay a flat monthly fee? Will you pay a fee if the balance in your account drops below a specified amount? Is there a charge for each deposit and withdrawal you make? If you can use ATMs with your account, is there a charge for this service? Are fees reduced if you have other accounts at the institution? Are fees reduced or waived if you agree to directly deposit your paycheck or government payments, like a Social Security check?