What is a savings account?
A savings account is one type of savings vehicle offered by financial institutions, where you can secure your money and earn interest, whether fixed or variable. These types of accounts aren’t meant for daily use. While many financial institutions will provide you with an ATM card, federal regulations restrict the number of withdrawals you can make in a month. Most financial institutions will cap the number of free transactions you’re allowed to make in a given time period. If you exceed that amount, you may be required to pay a fee, and/or the bank may close or convert your account to a checking account.
In return for keeping money in the account, the bank will often pay you a higher interest rate than you’d receive from a standard checking account, but this isn’t always the case. Some larger banks pay as little as 0.1% Annual Percentage Yield on a deposit, while others, like PurePoint® Financial, exceed that rate of return exponentially. With PurePoint, you can easily put money into a higher-interest Online Savings Account by transferring funds online. As a division of MUFG Union Bank, N.A., PurePoint accounts are also FDIC-insured, and provide a competitive savings rate.
When your financial institution is insured by the Federal Deposit Insurance Corporation (FDIC), your account balance, up to $250,000 per depositor for each account ownership category, is insured, too. This added sense of confidence and security is what makes many people choose these types of accounts vs. risk/reward investments.