Published June 28, 2024

What Is a Savings Account?

Ever found yourself with a bit of extra cash and wondered where to stash it? Enter the savings account. It's a pretty straightforward deal – you pop your money in, let it sit, and watch it grow thanks to interest. It’s like having a piggy bank, but way better because the bank actually pays you for keeping your money with them.

Savings vs. Checking Account: What's the Difference?

You might be thinking, “Can’t I just use my checking account for everything?” Sure, you can! But savings and checking accounts serve different purposes.

Checking accounts are your go-to for everyday transactions – paying bills, buying groceries, and grabbing that much-needed latte. They’re the financial workhorse that keeps the daily grind moving.

Savings accounts, on the other hand, are more like your financial safety net. They’re typically used for storing money you don’t plan to touch frequently. Think of savings accounts as the protective shell where your rainy day fund grows quietly in the background.

Interest Rates: The Juice of Savings Accounts

Now, here's where things get interesting (pun totally intended). The whole point of a savings account is to earn interest. But if you’ve got your savings parked at one of the big banks, you might want to take a closer look at that interest rate. Surprisingly, many traditional banks offer interest rates that are so low that you'd almost be better off keeping your money under your mattress.

Online banks, however, often come through with much juicier offerings. It’s like the difference between filling up at a gas station that’s notorious for high prices versus a no-name spot with amazing deals. Why the difference? Online banks save money by not having physical locations and pass those savings onto you!

Here’s a quick glance at what some banks are offering as of June 28, 2024:

Ally Bank - 4.20%
Capital One - 4.25%
American Express - 4.25%
Bank of America - 0.01%
Chase - 0.01%

Pretty telling, right? Those rates can make a significant difference in how your money grows over time.

Save More, Watch It Grow

Saving money here and there can really add up and give your savings account a nice boost. Check out these articles to help you save more:

The bottom line? Choose wisely where you park your money, and those little decisions can make a big impact over time. Keep saving, and let your money work as hard as you do!

If you want to take control of your finances and get a handle on where your money goes each month, Latwy offers a free 30-day trial.