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A Completely Guide to the Passbook Savings Account

A Completely Guide to the Passbook Savings Account

Prior to the advent of online banking and the online savings account, passbook savings accounts were extremely popular and, for most people, were the primary source for placing their savings.  Although today’s banking industry has advanced in leaps and bounds, there are many consumers who prefer to stick to tried and true ways of saving their hard earned money by placing that money into a passbook savings account.

But what is a passbook savings account? It is a savings account at a financial institution in which all deposits, withdrawals and other such transactions are recorded by the account holder in a small pocket size book that they keep themselves.  Perfect for serious savers and other consumers who wish to feel as if they have total control over their saved finances, the passbook savings account requires the account holder to make a note of every transaction such as withdrawals, deposits, debits, credits, bank fees, as well as any interest earned on the savings account. By doing this, the passbook savings account holder is able to ensure that their savings account amount accurately reflects exactly what they have written down in their book. A passbook savings account is also a great alternative for consumers who do not need to have a monthly banking statement sent to them or who make such infrequent transactions that keeping a written record of these transactions will not be overly time consuming nor difficult.

If a passbook savings account is a something that interests you, you will need to do some research on which banks offer such passbook savings accounts and what their terms and conditions are. There are a few banks that will require their customers to notify them in writing prior to the customer initiating a withdrawal of their money from their account. This is usually considered by some financial experts as a trick of sorts in that the customer may find it too cumbersome to request a withdrawal of their funds from their passbook savings account, so much so that they may just find it too bothersome at all and so will leave their funds in their account. This so-called trick will actually help people save their money instead of withdrawing it to spend unwisely.

One thing to keep in mind in regards to passbook saving accounts is that generally they do not have high interest rates, when compared with other types of traditional savings accounts. Trying to find a passbook savings account that has the best interest rate can be much like trying to find a needle in a haystack. One of the reasons for this is that there is a large volume of banks from which to choose, from huge powerhouse banks to locally owned and operated member credit unions. Each bank or credit union will have their own unique advantages and disadvantages of opening a passbook savings account. It is up to you to do your research and decide upon the best passbook savings account that meets your exact needs and requirements. One thing to consider when choosing a passbook savings account is the proximity of the bank to your home or work. You do not want to have to drive for miles and miles to get to your bank in order to withdraw money from your passbook savings account in the event of an emergency. If this situation will not pertain to you, then you can elect to choose a large banking institution where you might be able to find a much better passbook savings account interest rate.

All banks require a minimum amount of money to be deposited in order to open up a passbook savings account. This amount can vary from between $10 to a $100, depending on the financial institution. A good idea when choosing a passbook savings account is to look for one at an institution that compounds the yield that they pass on daily. Typically, this average daily yield is about 0.79%. With passbook savings accounts, most banks will also require a minimum daily balance. This daily balance can be as little as $5 or as great as $100. However, passbook savings accounts will all usually have very low, if none at all, maintenance fees.

Photo courtesy of kyz.

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