Savings Accounts
Learn all there is to know about savings accounts from regular passbook to high yield to HSAs. Discover where to get the best interest rates, how they are taxed, and how a savings club works.
Savings Accounts
-
A savings account is considered high-yield if it pays more than a financial institution’s regular demand deposit or passbook savings accounts. High yield savings accounts are typically money market savings accounts that are limited to six withdrawal transactions per month.
Learn More What Is a High-Yield Savings Account? -
Interest earned on savings accounts is reported to the IRS by commercial banks and other financial institutions and therefore is subject to federal income tax as regular income. Interest is reported on Form 1099 to bank customers, typically in January each year for the previous tax year.
Learn More How Is a Savings Account Taxed? -
Both savings accounts and Roth IRAs are funded with after-tax dollars by individual investors. However, unlike savings accounts, any capital appreciation earned with a Roth IRA is not subject to federal income tax. Growth in savings accounts, in the form of interest, is subject to taxation.
-
Simple interest for a savings account is calculated by multiplying the account balance by the stated interest rate and then multiplying by the time period the money is in the account. Interest = Principal amount X Interest Rate X Time Period.
Learn More How Interest Rates Work on Savings Accounts -
A savings account is different from a checking account in that it is meant for accumulation of funds and earning interest rather than being a transaction account accessible with checks and debit cards. Savings accounts can be freely accessed by the account holder through deposits and withdrawals on demand and generally pay higher interest than checking accounts but are not designed for payment transactions.
Key Terms
- Savings Account
A savings account is a deposit account held at a bank or other financial institution that pays interest on the balance held in the account. Interest rates are typically modest but these accounts provide safety for emergency funds and savings needed for long-term needs.
- Deposit Interest Rate
The deposit interest rate is the rate paid by banks and other financial institutions to deposit account customers in exchange for the use of their deposits to make loans. Deposit accounts include passbook savings, high-yield savings accounts, and certificates of deposit accounts.
- Sweep Account
A sweep account is a specialized account that is often attached to a brokerage account to automatically transfer or sweep cash funds into a low-risk, higher interest-earning investment such as a money market fund at the close of each business day.
- Passbook Loan
A passbook loan is a loan made to a savings account owner or depositor by the bank holding the funds. The savings account balances serve as collateral for the personal loan, which is also called a pledged asset loan.
- Linked Savings Account
A linked savings account is a deposit account connected to another account such as a checking or brokerage account. Linked savings accounts are usually held by the same financial institution as the customer's other accounts, facilitating efficient and timely transfer of funds between accounts.
- Joint Account
A joint account is a type of deposit account that is held by two or more people, often spouses. Joint accounts are generally checking or savings accounts where both parties can make account transactions like deposits and withdrawals individually.
![Two coworkers talking at an office desk](https://www.investopedia.com/thmb/ym8t4IdmUJB-mElX4012gVPtS3Y=/6000x4000/filters:no_upscale():max_bytes(150000):strip_icc()/Tiered-RateAccountsExamplesofHowTheyWork-689c859139d8482bad5a242255d18621.jpg)
![A woman makes an ATM withdrawal.](https://www.investopedia.com/thmb/JqfwqPDBSQKUucD2D3X3wcGD-pw=/2120x1414/filters:no_upscale():max_bytes(150000):strip_icc()/ATMwithdrawal-eb36d0edeaa34797ab64ce1056d8609b.jpg)
![A couple in a bank talks to a teller.](https://www.investopedia.com/thmb/nRoOrjkqhjrtZXAZx32_o9MYO_w=/6720x4480/filters:no_upscale():max_bytes(150000):strip_icc()/coupleatbank-c08007c2303749c095cc1bf4485e7d26.jpg)
![Young man savings account with mobile banking app on smart phone](https://www.investopedia.com/thmb/5Te1YT3-Dh21ELgSa8EeWnKH494=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-best-free-savings-accounts-5191103-c4e192ad36ff44638fee9bdd51266d89.jpg)
![Best Savings Accounts for Kids](https://www.investopedia.com/thmb/e7AH_SzT-jx0mGmCKIzyDMOLv5s=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1363267262-46185a80ce6d4e51bc995f87c5a2e19e.jpg)
![How Is a Savings Account Taxed?](https://www.investopedia.com/thmb/sERKKEuXw6m6pTCMzgk86m_ujgk=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/how-savings-account-taxed.asp-e91c4fe4edbf4878bc5ef132b43bdd0c.jpg)
![Sweep Account: A bank or brokerage account that automatically transfers amounts exceeding a certain level into a higher interest-earning account at the close of each business day.](https://www.investopedia.com/thmb/5218s6szHBhB76rulbfGRYq0sPM=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/sweepaccount.asp-Final-e0b16e87c6be4879a9376eec7787c292.png)
![The Best Alternatives to Bank Savings Accounts](https://www.investopedia.com/thmb/jGA-KlTs8o0Mx05iU-vXpb5k4iA=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/5-best-alternatives-bank-saving-accounts.asp-final-a38e92116c034ca88036a0af151d6b69.png)
![Friends sitting at home comparing deposit account options](https://www.investopedia.com/thmb/br16OXJw5dIt2gjBktUU_2RLLwY=/6720x4480/filters:no_upscale():max_bytes(150000):strip_icc()/TermDepositvs.DemandDepositWhatstheDifference-33b87736335f449d8467fc865aee1b60.jpg)
![Opening a Bank Account When You're a Resident, But Not a Citizen, of the U.S.](https://www.investopedia.com/thmb/A5zxiLgc14mSQa0bvdcL_0mOUck=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/can-foreign-individual-open-savings-account-united-states.asp-Final-f6421865108b4f9c838e2122389dbd9c.jpg)
![Annual Equivalent Rate: The interest rate for a savings account or investment product that has more than one compounding period.](https://www.investopedia.com/thmb/N8omlqjVERJBxbmgOJVQTdxeP78=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/aer.asp-final-87ba9d9d18f54b9fa7cb7236aec34e2b.jpg)
![Current Account Savings Account (CASA)](https://www.investopedia.com/thmb/7rI8lFe2jClbwjAYZTpLAOCRqhM=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/current-account-savings-account.asp-final-7c42919a0bb04dec840284f90debabc5.png)
![Young woman making bank deposit at ATM machine.](https://www.investopedia.com/thmb/mJyY6B6grMSQ0vVCbsuEM5lTKaM=/6240x4160/filters:no_upscale():max_bytes(150000):strip_icc()/TransactionWhatitMeansHowitWorksExample-444478a154564b238cb5a6e268540138.jpg)
![A young adult makes calculations.](https://www.investopedia.com/thmb/cXJwKff_jXv_QNCMJCNO1UcuDio=/5126x3411/filters:no_upscale():max_bytes(150000):strip_icc()/calculations-67a2c4633778406699b27814932dcee3.jpg)
![Two professionals review documents in an office.](https://www.investopedia.com/thmb/_loCym-5H-zf2a-XQYl0ebmkJmg=/2185x1371/filters:no_upscale():max_bytes(150000):strip_icc()/mmf-e9fd020388064561be3294b88a9e7760.jpg)
![A doctor explaining the drugs in the prescription to senior patient](https://www.investopedia.com/thmb/5WAPsrQgSByNlAuX_p2atIg4WMI=/8660x5773/filters:no_upscale():max_bytes(150000):strip_icc()/MedicalSavingsAccountMSAMeaningHistoryTypes-f1b796ae830845b1b65124bd972a9033.jpg)
![What to Know About Foreign Savings Accounts](https://www.investopedia.com/thmb/kO5nH2LDb8-FezFruQhhDmuGrxs=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/should-you-open-foreign-savings-final-1bd191a66e1241d98fb4a04982afd463.png)
![A client meets with a customer.](https://www.investopedia.com/thmb/W6R1hxTy6gtPmF_pC4BqHH3uW2s=/4000x2668/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1952383224-ad17437c95df4cf4a1c1cf94e33dcbe3.jpg)
![](https://www.investopedia.com/thmb/ogw_gYpBzJO-rhsrWomy1v3BJaA=/680x440/filters:no_upscale():max_bytes(150000):strip_icc()/atm_ap110418059108-5bfc381546e0fb0083c3e1f0.jpg)
![A young woman uses a laptop on the floor.](https://www.investopedia.com/thmb/pgVyvdYfqXTt28tnWMcT7mURhTg=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1307391885-d4644379a7ed47cca34abcfd414d8c65.jpg)
![CDs vs. MMAs vs. Savings Accounts](https://www.investopedia.com/thmb/fVipfspltHd7rVGLflKqnhVAqCE=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/get-best-savings-interest-rates-you.asp-final-cfe36548c2c94dc997bd585fa879de67.png)
![A woman sits at a computer, considering her finances.](https://www.investopedia.com/thmb/upmh3KqY1u1mAr_CH-T1svI5tok=/5275x3516/filters:no_upscale():max_bytes(150000):strip_icc()/Chase-Savings-Account-Rates-56580fd2d7cb4f4eb416bf375e5f9781.jpeg)
![IBAN vs. SWIFT Code](https://www.investopedia.com/thmb/bG6ARlPnRL9NKSOJYf4uDZOkRLM=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/whats-difference-between-iban-and-swift-code.asp-FINAL-1df82a2312304df69037b86d6df59e6f.png)
![Customer receiving deposit interest at bank counter](https://www.investopedia.com/thmb/6Uh5dIULWJxA-Qg4tZis_FeYBGY=/6720x4480/filters:no_upscale():max_bytes(150000):strip_icc()/DepositInterestRateDefinitionFixedVs.Variable-15bcc5e2cf294cbaac66d862bed06f99.jpg)
![A couple sit together at a couch with a tablet computer and paperwork, analyzing their finances.](https://www.investopedia.com/thmb/9BajOBt--c7H8vjJG5iKTMbAhZI=/6000x3376/filters:no_upscale():max_bytes(150000):strip_icc()/Bank-of-America-Savings-Account-Rates-fe23fbd49dac44519392c1354ba1a86f.jpeg)
![Two people discussing finances at a table with a laptop and clipboard](https://www.investopedia.com/thmb/Rd7j2C-217HjCIDw_HcL6cn2MgM=/6000x4000/filters:no_upscale():max_bytes(150000):strip_icc()/INV_MoneyMktAcctvsSavingsAcct_GettyImages-1393911364-37f83586885748adab61bcc17b9bc33d.jpg)
![Woman reading through paperwork with a laptop at a desk](https://www.investopedia.com/thmb/xeIsgb4bUqYgmLrpCahOVfll_cc=/8192x4320/filters:no_upscale():max_bytes(150000):strip_icc()/INV_WomanWorkingonPaperwork_GettyImages-1341697008-1da52e510f5142428caa335621ed31e2.jpg)
![A woman gets money from a teller.](https://www.investopedia.com/thmb/zUENpfoXEhyhLAoPvbRCKNlEEJg=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/womangettingmoney-6cc4194e37f549ea8439f9568a077df3.jpg)
![Two men meeting in an office](https://www.investopedia.com/thmb/bsOOT7buv9iNfEIuZ1IFO0IiJKs=/5410x3043/filters:no_upscale():max_bytes(150000):strip_icc()/INV_PassbookLoan_GettyImages-1186185280-f36693c8a4fa42a89c819b112b23fe09.jpg)
![Young couple reviewing bills](https://www.investopedia.com/thmb/TZoK__cSXjrbWzU9F9cmHR-Pw24=/380x253/filters:no_upscale():max_bytes(150000):strip_icc()/156416606-5bfc2b8b46e0fb00517bdff7.jpg)
![Senior woman using online banking on her phone to look at her savings account](https://www.investopedia.com/thmb/XcjFkvn70WOBW_Js1yzIVIoS7Mg=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-capital-one-savings-account-interest-rates-may-2023-7497281-ebb7e37d5b02472d88c8d53d6f1fe427.jpg)
![Woman paying bills using her laptop at her kitchen table](https://www.investopedia.com/thmb/HSILM-7kVF9-s3fq3UakpIprcE4=/4000x2668/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-usaa-savings-account-interest-rates-june-2023-7553970-bcf5bf1d06fb4fcab4cfbb2a7b1498fe.jpg)
![woman and man sit at kitchen counter working on laptop](https://www.investopedia.com/thmb/dnypALTy0pbUErJNrcnrU8jTkKM=/4000x2668/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-citibank-savings-account-interest-rates-june-2023-7553927-154c9962a02743f596ddbed31bf76cc7.jpg)
![A young woman goes over her finances at a table, with paperwork and a laptop.](https://www.investopedia.com/thmb/JlXAoabTFCtEBc2n5VB_u57Wgmc=/6720x4480/filters:no_upscale():max_bytes(150000):strip_icc()/youngwomangoingoverfinanceswithlaptop-c214af276ada4d1698b4317f37e544fb.jpeg)
![A senior couple planning their finance and paying bills while using a laptop at home](https://www.investopedia.com/thmb/RVJPuKq-zRpcORA-trLckSLGWVo=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-ally-bank-savings-account-interest-rates-may-2023-7505865-b6233fe6ae0a40e2b32e8d10f1a02c3b.jpg)
![Shot of young woman managing bank account on smartphone at cafe](https://www.investopedia.com/thmb/cG4SZd_ejFaLswV78a2jimepIWA=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-td-bank-savings-account-interest-rates-may-2023-7504983-d217a53a8bb9410dbaee15dd2bf1220d.jpg)
![A woman works at a laptop.](https://www.investopedia.com/thmb/GFpyxmcD9R4N9eUh-m5y_7-9Jgg=/2157x1390/filters:no_upscale():max_bytes(150000):strip_icc()/womanatlaptop-d996d507012a40d0bdbb4d5cafdc01fa.jpg)
![A man uses a smartphone.](https://www.investopedia.com/thmb/2MY7KoDK411JLIab6jfVUDkrb1w=/2120x1414/filters:no_upscale():max_bytes(150000):strip_icc()/manonphone-56e1c3c4b29d46bebe720f249b7c0332.jpg)
![A man looks thoughtful while working at a desk.](https://www.investopedia.com/thmb/EquizH8LeBcxSuSKlWKcxRHotug=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/thinkingatdesk-0b3c1492b2904f59a7441251bbe94e48.jpg)
![A man sits on the floor with his laptop, smiling and holding a payment card.](https://www.investopedia.com/thmb/bffaq8aN0Hzn2ohlspvu1G-vsbA=/8192x5464/filters:no_upscale():max_bytes(150000):strip_icc()/Happymanonfloorwithlaptop-79ffba3a23dc4698bca5c7f775ca7ce4.jpeg)
![A couple uses a laptop to shop online.](https://www.investopedia.com/thmb/lZMshuRe46Sua7DU1epfTZFUQoQ=/4000x2668/filters:no_upscale():max_bytes(150000):strip_icc()/christmas-680bfde9d9e4458fae9fbef7bc9ecdcd.jpg)
![Senior Couple Meeting with Financial Advisor](https://www.investopedia.com/thmb/25p-O5ZSCFzHs91-ql7_8YXhODI=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-e-trade-savings-account-interest-rates-june-2023-7553359-1e03e268735445a79538120e4b6479eb.jpg)
![young woman managing savings bank account on smartphone at cafe](https://www.investopedia.com/thmb/VMpxOtz_EggXYEDOL7hVNGqqkD8=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-apple-bank-savings-account-interest-rates-june-2023-7551428-dc1a89d7ac85489fa319c58cedf10c23.jpg)
![A man sits at a desk with paperwork.](https://www.investopedia.com/thmb/QObVLefmeedPsAs5_ONCdPkJ-II=/2120x1414/filters:no_upscale():max_bytes(150000):strip_icc()/mandoingpaperwork-624c1cd77e23452d8774d27219f6c6fb.jpg)
![A man sits at a desk with a computer, looking at his phone and some documents.](https://www.investopedia.com/thmb/zYf92Gnf-YcfZikkBnMmDbwZHng=/5500x3672/filters:no_upscale():max_bytes(150000):strip_icc()/Barclays-Savings-Accounts-Rates-d333df7b7d794885bbe9649a41a62328.jpeg)
![A woman uses a phone at a home desk.](https://www.investopedia.com/thmb/cc9wnDF54OFiZruFIGw1ufb9CI4=/2120x1414/filters:no_upscale():max_bytes(150000):strip_icc()/phoneuseatdesk-35e71e1c5fe14fba9ce4b9ca8cf97713.jpg)
![Relaxed young adult woman with cell phone to check savings account](https://www.investopedia.com/thmb/lUoD0J--LCs6a3pSz1RSY12NSQA=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-u-s-bank-savings-account-interest-rates-may-2023-7504991-1e7ecdad5dc64e5388c12f5045ad2eb9.jpg)
![Over the shoulder view of young Asian woman checking online banking on smartphone while handling personal banking and finance at home](https://www.investopedia.com/thmb/FcfTm9SQUtjbyMvGUkhARLaPwts=/4000x2667/filters:no_upscale():max_bytes(150000):strip_icc()/Primary-Image-state-farm-savings-account-interest-rates-may-2023-7505880-c403d6c9f4d54365bcb62e4f99d982dc.jpg)
![A man uses a laptop.](https://www.investopedia.com/thmb/8Gl7oTP4TA1xCCsglBakHflPST8=/2121x1414/filters:no_upscale():max_bytes(150000):strip_icc()/computerguy-e9203dd9ceb843c3b1d0a482f6ce4dbf.jpg)
![Savings Account](https://www.investopedia.com/thmb/oPyT07P72mlkBO983KFiHT8tzMw=/1500x1000/filters:no_upscale():max_bytes(150000):strip_icc()/savings-account-4189674-50a1d56471f44d6ea233dd9f6b39226f.jpg)
![Couple co-signing a lease contract with real estate agent.](https://www.investopedia.com/thmb/UL08nfqGCOkwrCxlZSBAZE2mPhQ=/5760x3840/filters:no_upscale():max_bytes(150000):strip_icc()/WhatIsJointADefinitionHowItWorksandRisks-d48fb50549e941d9965dc31eb929c7a7.jpg)
![a couple looking at their laptop in their living room](https://www.investopedia.com/thmb/YM5RA71inzn6xod_mTFFyUIUpts=/2119x1414/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1166987337-60511325f80e4cb288d6201e60267524.jpg)
![What to Know About Thrift Savings Plans](https://www.investopedia.com/thmb/_6gTgxa4yvS2ucUa3VuVX8df90U=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/thrift-savings-plan-tsp-qualified-retirement-plan.asp-final-08f6180377a54a26938e3efc76da5624.jpg)
![A young person adds coins to a jar labeled "Savings."](https://www.investopedia.com/thmb/sFnRJUx4B1W7zvyss9o4aGbJGAM=/6240x4160/filters:no_upscale():max_bytes(150000):strip_icc()/youngpersonsavesupcoins-07c4057af4804d099d5d2d921fd6a872.jpeg)
![What Can Be Paid With HSA Money?](https://www.investopedia.com/thmb/q3wyvQC3cvyb5rlgyl37Wr2NtiM=/4000x2700/filters:no_upscale():max_bytes(150000):strip_icc()/rules-having-health-savings-account-hsa_final-58180fce30aa4fe8b278b4137e8ccb48.png)