A savings account is a type of bank account where you can place your money “out of sight”, and semi-easily have access to it. While your money is in the bank, you can earn interest on it, and assuming your bank is FDIC insured, your money is protected.

Most modern savings accounts allow you a number of withdraws a month and may or may not provide access to a debit card. You can also usually transfer funds online and use online bill pay through your savings account.

However, unlike a checking account, you cannot write checks from it like you can a checking account and they do not allow you to over draw your account.

Before computer automation, the only way to get money from a savings account would be to go to the bank itself. Because the bank knew they had access to your money, they’d give you interest as they could use your money to fund other business the bank has, for example home loans (mortgage), car loans, etc.

The interest rate of your savings account today is very low however. Low interest rates on mortgages, car loans, etc mean that the bank is not going to pay you very much, because they don’t make much on your money.

Banks 20-30 years ago could offer you between 3 and 5% interest, sometimes better than inflation, so you could make money “while you slept”. Today however, most banks only offer 0.05% to 0.2% for the savings account, which doesn’t even cover inflation.

So why get a savings account? The key is “access”, or lack of access actually. By not having easy ready access, it makes it easier to save to large expenses down the road (down payment on a house/car, nice vacation, etc) rather than being tempted to spend it now.

Some banks allow you to automatically move some money every pay period into your savings, so you automatically start saving for those big expenses, without even seeing the money. Because you do it without seeing the money, and it’s done automatically, its easy to save.