General Question

elbanditoroso's avatar

Does anyone use savings accounts any more?

Asked by elbanditoroso (22236points) August 5th, 2014

I was looking at some advertising from a nearby bank – they are pushing a joint checking/savings account where the savings interest rate is a whopping .05% (sarcasm).

In this world, we now have money market accounts (same bank) that pay .45%, and various internet based banks (Ally, for example) that are paying .90 or .95% on savings.

(Not to say that .95 is particularly good, but it’s 19 times better than the nearby bank’s savings account)

Does anyone still have plain old savings accounts? How would they justify it?

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31 Answers

rojo's avatar

We also use a MM account and maintain a checking account.

JLeslie's avatar

I consider my money market to be my savings account, and I find it annoying that the banks think of them as different. Who would get an account that has significantly less interest when another account called something different has more interest and functions exactly the same. I don’t get it to this day.

basstrom188's avatar

Yes I have but don’t keep much in it. I keep money in there for emergencies as it’s easy to withdraw money and pays a teansie bit of interest. Might close it as my checking account with interest now pays more interest.

Bill1939's avatar

We have both a Money Market and a savings account. However, we have only drawn money out of the savings in recent years. One advantage of a savings account is that one can more easily accumulate money to be used for major purchases, like paying cash for a new car.

JLeslie's avatar

@Bill1939 @basstrom188 What’s the difference? I just don’t understand it. I can deposit and withdraw out of my money market at whim.

Bill1939's avatar

@JLeslie the interest the MM pays is better than savings.

JLeslie's avatar

Right, so why does anyone have a savings account? Unless it has lower minimums without fees or something?

Pachy's avatar

I keep a small savings account linked to my checking account in case I need a quick injection of cash toward the end of the month or to cover any possible (though unlikely) overdrafts. I don’t care about the tiny amount of interest I’d get if that money were in one of my other savings instruments—I like the peace of mind of having that little backup.

JLeslie's avatar

I think my money market is linked to my checking. The higher balance in the money market means I basically have no minimum for my checking account, the banks just look at it as one big number.

dappled_leaves's avatar

I agree with @JLeslie; there doesn’t seem to be a difference anymore between chequing and savings accounts. Of course, you choose the right account(s) for you, depending on the balance between service charges, interest, and other restrictions. But there no longer seems to be a clear categorical classification of these types of accounts across banks. The names are assigned almost arbitrarily.

JLeslie's avatar

@dappled_leaves I didn’t say checking. In my experience checking gives much lower interest rates and that is used to pay bills. I can’t bill pay from my money market as far as I know.

dappled_leaves's avatar

@JLeslie Ah. I didn’t realize the line you were dissolving was between savings accounts and money market accounts. We don’t have money market accounts here… effectively, this probably means that what we call savings accounts are your money market accounts, and what you call saving accounts are our chequing accounts!

I kid, but I bet there are only small differences.

FireMadeFlesh's avatar

Yes, but mine pays around 4%. I don’t have a whole lot in it, as I think that while I am young there is more to be gained in higher risk investments. However it is at least a stable place to store money for my basic expenses, and the interest is enough to keep me ahead of inflation.

JLeslie's avatar

@FireMadeFlesh 4%?! Where?

@dappled_leaves Interesting. Where do you live? The checking accounts are literally accounts you get a check book with and can do online bill pay. Money markets are just like savings here, but possibly, I don’t know for sure, the interest rate is determined by separate sources, or the bank just makes up whatever suits them. For the life of me I can’t see the difference between money market and savings for the consumer here in the US. They are both insured by the FDIC and they both protect your principle. You can’t lose money in either account.

gailcalled's avatar


I haven’t used one in years. If I want almost no interest, it’s available with my checking account. I earn between 4 cents and 6 cents a month on mine. It just makes balancing the damn thing, when I bother, more irritating.

If I occasionally need an infusion, I can do it electronically with a Fidelity Money Market Fund that I keep for large emergencies (that also pays no interest.)

JLeslie's avatar

@gailcalled I think my American Express account pays around .9%. Still very low but it adds up a little. I moved some money from fidelity to open the Amex.

dappled_leaves's avatar

@JLeslie I’m in Canada. I’ve been looking into this a little more, and I think the reason that I’ve never thought about them is that I don’t do this through my bank, I use a separate broker. And for tax purposes, these funds are removed from me by another level – they are invested in through RRSPs, so that my taxable income is reduced by the amount invested.

So indeed – in my case, these funds cannot be swiftly accessed, though I’m not sure if it would be different if my bank were handling the funds.

Tropical_Willie's avatar

My bank has a minimum deposit for Money Market of $1000. Business Money Market accounts require a $10,000 for a slightly higher interest rate.

RocketGuy's avatar

We keep our money in a credit union – interest is near MM. We keep our kids’ savings in a savings acct. They get 2 cents per month interest. When they found out, they asked: “Is that all?!”

JLeslie's avatar

@rocketguy Smart kids. When I was a kid interest was very high, I think around 12% when I started paying attention. It was incentive to want to save. Another benefit to higher interest rates. Not that I want to go back to 12%, but 5% would be nice.

talljasperman's avatar

I do… before I moved to Red Deer I actually had money and I put it in savings I made $.25 cents a month interest. It was segregated from my checking account and at the end of each month I put the excess into checking.

marinelife's avatar

I use them through my credit union.

jerv's avatar

Nope. Part of it is the low rates (even lower for those of us who don’t have a spare $10,000 to keep in there). No MM either since I can’t spare their minimum deposit. See, making money is a luxury, and the only ones who get luxury are those that have money.

It only adds up if you ignore inflation anyways, so why not make the money work for you by eating, or paying bills? Paying $10 for enough gas to get to work for a day pays me more than being unemployed and trying to live off the interest of that $10 as it sits in the bank.

talljasperman's avatar

@talljasperman Sorry * I put the excess in to savings through my credit union.

RocketGuy's avatar

My credit union has a $100 minimum for a MM acct. 0.70% interest, whoo hoo!

nettodo's avatar

I still have a traditional savings account. 0.75% interest. It works for my needs.

jerv's avatar

@nettodo @RocketGuy With a $5000 balance, that’s less than a tank of gas a year. Scratch tickets have better returns. It’ll take 92.7 years to double your money.

FireMadeFlesh's avatar

@JLeslie The lucky country ;). Australia. The 4% account has withdrawal limits though, as it is designed to assist long term saving. Most of my accessible money stays in an account with a 2.5% interest rate but no restrictions on use.

Aster's avatar

Most of my $ is in stocks but I have a five figure checking account and have for many years. I don’t remember ever having a savings account!
And @Coloma I have never had a $100 meal. Maybe that’s disgraceful?

downtide's avatar

I have my savings in an ISA which has the advantage of being tax-free and I get about 1.5% interest p.a. There’s a limit to how much you can invest in a year, but I don’t meet the limit so it works well for me.

KNOWITALL's avatar

I keep two checking accounts, one with debit only for ‘savings’, one for bills. My IRA can take any excess & make money.

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