Banking regulations stipulate that a depositor must give a minimum of seven days written notice before withdrawing funds from savings deposits, but this requirement is seldom enforced. This requirement is why savings deposits are included in the broader category of time deposits.

While savings deposits have a legal time requirement of at least seven days, like certificates of deposit, they have no explicit maturity date. In other words, the accounts can remain inactivity in perpetuity. However, savings deposits do have limits on the number of withdrawals per month, often with a minimum amount per withdrawal.

Savings Deposits and M2

Savings and Savings and Savings and Savings

• Standard Savings Accounts: These are common savings accounts issued by commercial banks, savings and loan associations, and mutual savings banks. Should a customer enter an bank and request to open a "savings account," this is what they get. These accounts pay a minimal interest rate and have requirements on minimum time for accessing funds, number of withdrawals per month, which may or may not be enforced by the bank.


• Passbook Savings Accounts: These are savings accounts, usually at savings and loan associations and mutual savings banks that are accessed by means of a passbook possessed by the customer. Deposits or withdrawals, along with interest accrued up to that time, are recorded in the passbook at the time of transaction. Such accounts were quite common in the days before computerized record-keeping, but have become less so in modern times.


• Share Accounts: These are basic savings accounts offered by credit unions. Reflecting their status as nonprofit mutual associations, credit unions termed their savings accounts "share" accounts. Share accounts usually pay slightly higher interest rates than standard savings accounts, but otherwise they function much the same.


• Money Market Deposit Accounts: These are accounts that also pay higher interest rates than savings accounts, but have minimum balance requirements and have limited check writing capabilities. These accounts were developed by banks in response to money market mutual funds offered by mutual fund companies.

A Word about CDs

Certificates of deposit are so name because in the days before computerized record-keeping, depositors received an actual certificate, a document, stipulating the terms of the deposit--maturity date and interest rate.

Liquidity Plus