Savings account
Topic: Banking, Credit Creation and Monetary Policy · NCERT: Class 7, Ch 8 "Banks and the Magic of Finance"
Meaning
A savings account is a bank account for individuals who want to save a part of their income regularly. It earns interest. You must keep a minimum balance, and there are limits on how many times you can withdraw each month. Its balance is a demand deposit, meaning you can withdraw it on demand. Such balances count as money.
Example
A college student opens a savings account, deposits ₹500 every month from a part-time job, and earns interest on the balance. The bank limits how many withdrawals they can make each month.
Don't confuse with
- Current deposit account: this is for businesses, pays no interest and has generally no limit on transactions.
- Fixed deposit: it pays a higher rate, but the money is locked for a fixed period.
Related concepts
- Deposits
- Current deposit account
- Fixed deposit
- Demand deposits
- Cheque
- Passbook
- Debit and credit
- Interest
- Compound interest
- Interest rate spread