What Is the Advantage of a Passbook Savings Account?

Passbook savings instill discipline for savings and offer a great alternative for those who prefer less technology.

Instead of having an ATM card and electronically produced monthly statements, passbook savings accounts are managed with a ledger the saver keeps and in which a teller records each and every transaction: deposits, withdrawals, interest earned and fees. Although their interest rates are generally lower, millions of savers remain loyal to passbooks because they encourage savings and offer greater control over account information.

Encourage Savings, Discourage Withdrawals

Passbook savers have to make a trip to the bank during business hours for every single transaction. This supports savings by discouraging the frequent withdrawals made possible and convenient through ATM cards.

Comfort for Technophobes

Many banks forced their passbook savers into monthly statements and ATM cards, making the passbook a treasured relic in the 1980s. Some banks, however, maintained the accounts, which are highly profitable for banks but provide comfort for customers who are weary of and confused by ATMs, and customers who demand a face-to-face transaction to handle their hard-earned money.

Ready Access to Account Information

Passbooks are kept by the savers. Therefore, they never have to log into a computer or call the bank to find out how much money they have on deposit. Moreover, because they look at each transaction, passbook savers are more likely to spot errors that those whose statements are electronically produced can miss.

Secure Funds

Like most deposits in a bank, funds from passbook savings accounts are insured by the federal government. Moreover, they incur fewer fees associated with using ATM cards and other banks.

Safe Transactions

In addition, because all transactions take place inside a bank, passbook savers have a lower risk of being robbed at an ATM. Many passbook savers conduct transactions that are numerically fewer but that involve high dollar amounts, making safety an important issue.

References

• New York Times: Many Customers Still Balk At Push-Button Banking; Skipping A.T.M.'s for Tellers and Passbooks