What is the primary purpose of a savings account?

The primary purpose of a savings account is to provide a secure place for savings while earning interest on deposited funds. Savings accounts are designed specifically for individuals to set aside money for future use, whether for emergencies, short-term goals, or simply to build financial security. The interest earned on the deposited funds helps to grow the savings over time, albeit usually at a lower rate compared to more aggressive investment options.

In contrast to checking accounts, which are meant for daily transactions and easy access to funds, the primary aim of a savings account is to encourage saving rather than frequent spending. It is not intended for direct investment in stocks or bonds, which carry higher risks and potential returns. Additionally, while savings accounts do facilitate withdrawals, the focus is on security and earning a modest interest rate rather than promoting frequent transactions without penalties.