The passbook is the traditional document to keep track of earnings in a savings account

Savings accounts are accounts maintained by retail financial institutions that pay interest but can not be used directly as money (by, for example, writing a cheque). A passbook or bankbook is a paper book used to record bank transactions on a Deposit account. In Financial economics, a financial institution acts as an agent that provides Financial services for its clients or members Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets Money is anything that is generally accepted as Payment for Goods and services and repayment of Debts. A cheque (spelled check in American English) is a Negotiable instrument instructing a Financial institution to pay a specific amount of These accounts let customers set aside a portion of their liquid assets while earning a monetary return.

Features

Savings accounts are offered by commercial banks, savings and loan associations, credit unions, building societies and mutual savings banks. A commercial bank is a type of Financial intermediary and a type of Bank. A savings and loan association, also known as a thrift, is a Financial institution that specializes in accepting Savings deposits and making Mortgage A credit union is a Cooperative Financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift providing credit A building society is a financial institution owned by its members, that offers banking and other Financial services, especially mortgage lending A mutual savings bank is a Financial institution chartered through a state or federal government to provide a safe place for individuals to save and to Invest

Obtaining funds held in a savings account may not be as convenient as from a demand account. A transactional account ( North America: checking account or chequing account, United Kingdom and some other countries current account For example, one may need to visit an ATM or bank branch, instead of writing a cheque or using a debit card. A debit card (also known as a bank card) is a plastic card which provides an alternative payment method to Cash when making purchases However, this transference is easy enough that savings accounts are often termed "near money".

Some savings accounts require funds to be kept on deposit for a minimum length of time, but most permit unlimited access to funds. In the US, Regulation D, 12 CFR 204. 2(d)(2)] limits the withdrawals, payments, and transfers that a savings account may perform. ^[1] Banks comply with these regulations differently; some will immediately prevent the transfer from happening, while others will allow the transfer to occur but will notify the account holder upon violation of the regulation. True savings accounts do not offer cheque-writing privileges, although many institutions will call their higher-interest demand accounts or money market accounts "savings accounts. A money market account is a Deposit account with a relatively high rate of Interest, and short notice (or no notice required for withdrawals "

All savings accounts offer itemized lists of all financial transactions, traditionally through a passbook, but also through a bank statement. A passbook or bankbook is a paper book used to record bank transactions on a Deposit account. An account statement or a bank statement is a summary of all Financial transactions occurring over a given period of time on a Deposit account, a Credit

Regulations

In the United States, under Regulation D, 12 CFR 204. 2(d)(2), the term "savings deposit" includes a deposit or an account that meets the requirements of Sec. 204. 2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted or authorized to make up to six transfers or withdrawals per month or statement cycle of at least four weeks. A depository institution is a Financial institution in United States, such as a Savings bank, that is legally allowed to accept monetary Deposits The depository institution may authorize up to three of these six transfers to be made by check, draft, debit card, or similar order drawn by the depositor and payable to third parties. A deposit account is a current account at a Banking institution that allows money to be deposited and withdrawn by the account holder with the transactions and resulting balance There is no regulation limiting number of deposits, however some banks may choose to limit deposits themselves.

Within most European countries interest paid on deposit accounts is taxed at source. The high rates of some countries has led to the development of a significant offshore savings industry. The European Union Savings Directive has made arrangements with many offshore financial centres for either information on interest earned to be shared with EU tax authorities or for withholding tax to be deducted on interest paid on offshore accounts, because of concerns relating to potential tax evasion. The so-called European Union withholding tax is a Withholding tax which is deducted from interest earned by European Union residents on their investments made in another An offshore financial centre (or OFC) although not precisely defined is usually a low- Tax, lightly Regulated jurisdiction which specializes in providing The European Union ( EU) is a political and economic union of twenty-seven member states, located primarily in Tax avoidance is the legal utilization of the Tax regime to one's own advantage in order to reduce the amount of tax that is payable by means that are within the law Account holders must either pay the withholding tax or disclose account holder information to relevant tax authorities. ^[2]

Costs

Withdrawals from a savings account are occasionally costly and are sometimes much higher and more time-consuming than the same financial transaction being performed on a demand account. A financial transaction involves a change in the Status of the finances of two or more businesses or individuals However, most savings accounts do not limit withdrawals, unlike certificates of deposit. A certificate of deposit or CD is a Time deposit, a financial product commonly offered to consumers by Banks thrift institutions, and In the United States, violations of Regulation D often involve a service charge, or even a downgrade of the account to a checking account. With online accounts, the main penalty is the time required for the Automated Clearing House to transfer funds from the online account to a "brick and mortar" bank where it can be easily accessed. Automated Clearing House (ACH is the name of an electronic network for financial transactions in the United States. During the period between when funds are withdrawn from the online bank and transferred to the local bank, no interest is earned.

Notice deposit account

In some countries, such as the United Kingdom and Burkina Faso, an account called the notice deposit account is available. A slight interest premium is paid, with the caveat that one must give up to 90 days notice to make a withdrawal without a fee. Often, withdrawals can be made without notice by paying a penalty equivalent to the interest earned in the notice period. This is in contrast to instant access deposit accounts, which do not require notice for withdrawals. Notice deposit accounts are not common in North America.

See also

• Personal account
• Transaction deposit
• Money market deposit account
• Christmas club

References

External links

• Online Banking at the Open Directory Project