How Does a Passbook Account Work?


The most common types of bank savings accounts that consumers use today include traditional, money market and CD accounts. One other less known type of savings account is the passbook account. Though passbook accounts aren’t as popular as they were in years past because of the ability to monitor your accounts online, they still may have some uses for certain individuals.


A passbook account is just like a standard savings account except the bank updates transactions on a printed book with multiple pages. It provides an ongoing printed record of withdrawals, deposits you make to the account and interest payments. The passbook looks like a small notebook with flipping pages and contains identifying information about the bank where the account is located. The book is designed to pass through bank printing machines. Passbook accounts have been in existence since the 1800s.


One benefit of a passbook account is that you can carry a record of your savings account with you at all times and refer to it whenever needed. Whenever you want an update you can simply visit a branch of the bank and hand the passbook to a representative so that he can print the latest transactions. A passbook account is ideal if you don’t have a computer to view an online statement or simply prefer this traditional method of banking. Like other savings accounts, a passbook account is a safe investment vehicle for your money.


The biggest downside of a passbook account is that you risk losing the book. This puts the account at risk since in some cases the bank prints the account number and other identifying information on the book. Also, if you lose the passbook you have to start a new one and have the bank reprint all recent transactions for a period of time. Passbooks also have a limited amount of space so you have to keep getting a new one once the last one fills up. One other disadvantage of passbook accounts is that they tend to have low interest yields.

Other Considerations

Not all banks offer passbook savings accounts -- you may have to do some research and ask around. You may have more luck finding a passbook option at a small local bank or a credit union. When deciding on a passbook account ask for the interest yield, minimum initial deposit, the minimum monthly balance -- if required -- and any maintenance fees.

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