Savings accounts allow you to deposit money for safekeeping while also earning interest on your balance. If you’re interested in opening a savings account, there are a few important things to know about how they work.
What Is a Savings Account?
As Forbes states a savings account is a deposit account that’s designed to hold the money you don’t need to spend right away. This is different from a checking account, which may allow you to write checks or make purchases and ATM withdrawals using a debit card.
Savings accounts help you stash money away for specific purposes and goals. For example, you may open a savings account to hold your emergency fund, or you could set up a down payment savings account ahead of buying a home.
While savings accounts can offer convenient access to your money. Still there are limits to how often you can tap into one. Until very recently, Federal Reserve Board Regulation D has limited you to six withdrawal transactions per month, including:
- Overdraft transfers to a checking account
- Electronic funds transfers (EFTs)
- Automated clearing house (ACH) transfers
- Transfers made by phone, fax, computer, or mobile device
- Wire transfers made by phone, fax, computer, or mobile device
- Check or debit card transactions
In April 2020, the Fed issued a final interim rule, giving financial institutions the option of lifting the six-per-month withdrawal restriction. However, if you go over the six transaction limit, your bank still can charge an excess withdrawal fee. The good news is that some transactions, such as transfers made via ATM or a branch, don’t count against this limit.