Define a Passbook Savings Account

Passbook savings accounts traditionally had a book issued by the bank to the customer in which deposits, withdrawals and interests were recorded. The passbook would include the customer's name and account number along with the other monetary records of the account.

Features of a Passbook Account

The passbook savings account is one of the safest investments available. Deposits are insured up to $100,000 by the FDIC.

Benefits

You may withdraw your funds at any time without loss of interest. This makes a passbook a good account for emergency funds.

Features

A passbook is a good account to start a child off with when you are trying to teach him about money. By recording each transaction, he can see his savings grow.

Considerations

Although safe and readily available, passbook savings accounts usually pay the lowest interest rate of any of the banks' savings instruments.

Significance

With the advent of ATMs, money markets and certificates of deposits, many people have turned away from passbook savings accounts, but for the small investor, they still have a use.