Overview

Most financial institutions use your money to make money. They do this by:

• Investing your money
• Lending money

Through the process, financial institutions hope to bring in more money than they’re paying you. In exchange for the use of your money, the financial institution pays you interest.

The simple savings account is a pumped-up version of your piggy bank, except that the savings account pays interest and is safe, since the bank is insured by the Federal Deposit Insurance Corporation (FDIC), a government agency. Even if the bank becomes insolvent, the government guarantees the return of your money up to $100,000 in most cases. The Savings Association Insurance Fund (SAIF) is part of the FDIC and insures savings and loans.

With a savings account, you have easy access to your money. Usually, however, you may not access your savings account with a debit card or a check.

Earning Interest >>