What Is a Passbook Account?

Passbook accounts are issued to customers by banks to help them keep track of their transactions, including deposits and withdrawals. These types of accounts are not as popular as they once were, but they are still offered by some financial institutions.

Transaction Record

Someone holding a passbook account must take the book with him to the bank when he has a transaction completed. The teller updates the transaction with a printer. In the past, tellers had to write the transactions in the passbook.

Account Activity

Customers using passbooks typically do not have a large number of transactions, so they have no need for monthly statements.

Terms and Fees

Passbook accounts do not have as many fees or penalties as standard bank accounts often do, but some may have a minimum balance requirement.

Rate of Interest

Passbook accounts are not recommended for profitable investing, because they pay a very low rate of interest. Anyone hoping to build a large sum of money may want to consider other investing instruments offered by a bank.

FDIC Insured

Passbook savings accounts are liquid, and they are considered one of the safest instruments for saving your money. They are insured by the Federal Deposit Insurance Corporation (FDIC).

References

• Bankrate.com: Passbook and Statement Savings Accounts Barely Pay
• Mighty Bargain Hunter: What Are Passbook Accounts?

Resources

• FDIC: Insured or Not Insured?