Traditional savings accounts are typically low-maintenance bank accounts that safely tuck away your cash and earn interest. Money in your savings will earn an annual percentage yield (APY), expressed as a percentage. The higher the rate, the more your money can grow over time. However, traditional savings accounts from traditional institutions may not have the most competitive rates and might come with old-school restrictions.
Featured traditional savings accounts
These accounts feature market-leading APYs, few fees and little to no minimum deposit requirements.
A traditional savings account is a deposit account that earns interest on your balance. A traditional savings account’s typical interest rate is
0.42%(1), and most traditional savings accounts allow for up to six withdrawals per month.
For the most part, traditional savings accounts don’t have monthly fees and are offered by just about all banks and credit unions. Savings accounts also have variable interest rates, which means the bank can increase or decrease the rate at any time, often in response to market conditions.
Regular savings accounts are not designed for spending, making them more restrictive than some bank accounts, such as checking accounts. Most traditional savings accounts won’t come with an ATM card or checkwriting privileges, and since they’re not designed for spending, perks like cashback rewards or discounts won’t be included.
Yes, savings accounts are deposit accounts, so they are covered under FDIC or NCUA deposit insurance. Most banks and credit unions have deposit insurance up to $250,000 per depositor, per FDIC-insured bank, per ownership category.
How do traditional savings accounts work?
Savings accounts are deposit accounts that allow for cash deposits, check deposits, withdrawals, direct deposits, ACH transfers between accounts and recurring deposits. After you add funds to a savings account, your deposited money will earn interest, typically on a daily, monthly or yearly basis. How fast your savings will grow depends on your interest rate and how it compounds.
Most competitive savings accounts have compounding interest, usually daily or monthly. Compound interest simply means that your interest earns interest, since your interest earnings are added to your account balance, and then the account’s APY is applied to your new total account balance.
Are savings accounts worth it?
Absolutely. The biggest advantage of savings accounts is that they earn interest, which means they’re great places to store any cash you don’t want or need to spend.
Putting saved cash in an interest-bearing savings account means it will continue to grow even if you’re not regularly depositing more funds. Static cash will eventually lose purchasing power thanks to inflation. Putting your money somewhere to grow passively gives it a fighting chance against the rising cost of living and goods.
What can I use a traditional savings account for?
You can use a traditional savings account to tuck away cash for just about any savings goal, including:
There isn’t a set number of savings accounts you should have. How many accounts we would recommend depends on your family size, your existing savings account balance and how much you want to organize your savings goals.
For example, if you’re single and employed, you may not need more than one savings account. If you’re married and have three kids, you might want more than one savings account to separate family savings, college funds, joint savings and so on. If you’re coming close to your bank’s $250,000 FDIC coverage limit in a single savings account, you may want to consider adding some funds to another account to cover that excess.
If you don’t want to open multiple savings accounts, consider accounts with subaccounts. For example, SoFi Checking and Savings. SoFi®’s accounts have Vaults that let you divide your money into different categories without having to open and manage multiple accounts at different banks.
Is your money stuck for a set time in a traditional savings account?
No, savings accounts don’t “lock” your funds away for a set time. Traditional savings accounts don’t have terms or fixed interest rates. If you want to deposit money into your savings account, there are no restrictions on how often you can do that, and your account will not close automatically after a set period.
However, if you exceed your traditional savings account’s withdrawal limits (typically up to six per cycle), your funds may be “locked” from withdrawing until the next statement period. Some banks allow you to withdraw over your monthly limit, but they may charge an excessive withdrawal fee.
A savings account can help you reach your goals by offering these benefits:
Earn interest on saved funds
Federal insured deposit accounts
Low-maintenance accounts with no or few fees
Widely available banking options
Often lack minimum balances to keep open
Cons of traditional savings accounts
A traditional savings account isn’t the perfect bank account for all situations.
Variable interest rates that could change any time
Often have monthly withdrawal limitations
No spending capabilities
Compare top savings accounts
Narrow down top savings accounts by features, monthly fees and interest rates. For a closer comparison, tick the Compare box on multiple accounts to see them side by side.
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What is the Finder Score?
The Finder Score crunches over 250 savings accounts from hundreds of financial institutions. It takes into account the product's interest rate, fees, opening deposit and features - this gives you a simple score out of 10.
To provide a Score, Finder’s banking experts analyze hundreds of savings accounts against FDIC-reported national averages as a baseline. Accounts with rates well over the national average are scored the highest, while accounts with rates well below are scored low.
You can find traditional savings accounts at just about any financial institution — they’re considered an essential bank account used for a variety of purposes. Savings accounts typically come with no monthly fees, earn interest on your balance and include federal deposit insurance so your funds are protected if the bank goes under.
What is a traditional savings account typical minimum balance?
It depends on the bank or credit union. Generally speaking, most traditional savings accounts from brick-and-mortar institutions don’t have minimum balance requirements to keep the account open.
You may be required to make an opening deposit, which could be $1 to $100 (or more), and then hold a specific balance to earn interest. If you’re comparing high-yield savings accounts, you may need to hold a balance to earn the highest rate the bank offers, but the amount varies greatly by institution.
What’s the difference between a traditional and an online savings account?
For the most part, there are no differences between online and traditional savings accounts. A traditional savings account is just one that earns interest on your balance, is federally insured and is designed to store funds without spending abilities. Today, most banks and financial institutions allow you to open savings accounts online.
Does opening a savings account affect my credit score?
No. Deposit accounts, like savings and checking accounts, are not types of credit and have no bearing on your credit score. A bank or credit union may review your credit reports to verify your identity when you apply for a new bank account, but it’s a soft credit inquiry that will not impact your credit.
However, a negative banking history may appear on your ChexSystems report. ChexSystems is a reporting bureau that keeps track of your banking history. If you have a less-than-ideal banking history that’s getting in the way of opening a new bank account, consider second-chance accounts.
Bethany Hickey is the banking editor and personal finance expert at Finder, specializing in banking, lending, insurance, and crypto.
Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt.
Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others.
Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine. See full bio
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Hello! I have a question about a kind of flexible time frame for a locked savings account. I have a plan that I want to move across country, so I need to save, but sometimes I’m bad with money Haha. So I was curious if you knew of a bank that might include a possible locked savings plan similar to what I’m searching for. Or what I could work with best. Thank you!
nikkiangcoJuly 26, 2019
Hi Lettie,
Thanks for getting in touch!
It’s great to hear that you have all your savings plans laid out. If you need savings to an account you can’t touch, then a savings account with no ATM access may be suitable for you.
As a friendly reminder, review the eligibility criteria as well as the account terms and conditions before applying and making a decision on whether it is right for you.
Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which Finder receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. Finder compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
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Hello! I have a question about a kind of flexible time frame for a locked savings account. I have a plan that I want to move across country, so I need to save, but sometimes I’m bad with money Haha. So I was curious if you knew of a bank that might include a possible locked savings plan similar to what I’m searching for. Or what I could work with best. Thank you!
Hi Lettie,
Thanks for getting in touch!
It’s great to hear that you have all your savings plans laid out. If you need savings to an account you can’t touch, then a savings account with no ATM access may be suitable for you.
As a friendly reminder, review the eligibility criteria as well as the account terms and conditions before applying and making a decision on whether it is right for you.
Hope this helps!
Best,
Nikki