Savings Account

[stockbroker]

Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money (for example, by writing a check). These accounts let customers set aside a portion of their liquid assets while earning a monetary return. For the bank, money in a savings account may not be callable immediately and therefore often does not incur a reserve requirement freeing up cash from the bank's vault to be lent out with interest.


The other major types of deposit account are transactional (checking) account, money market account, and time deposit.

[stockbroker]

In the United States, under Regulation D, 12 Code of Federal Regulations(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 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. 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. There is no regulation limiting number of deposits, but some banks choose themselves to limit deposits.


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 financial centers 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. Account holders must either pay the withholding tax or disclose account holder information to relevant tax authorities.

Quoted