Passbook Savings Account

Passbook savings accounts are accounts maintained by commercial banks, savings and loan associations, credit unions, and mutual savings banks that pay interest but can not be used directly as money, by, for example, writing a cheque. Often the statements for these savings accounts are kept in a passbook, hence the name.

Features
Obtaining funds from a savings account may be a bit more complicated than for a checking account. For example, one may need to visit an ATM or bank branch, instead of writing a cheque or using a debit card. However, this transference is easy enough that savings accounts are often termed near money.

Some passbook savings accounts require funds to be kept on deposit for a minimum length of time, but most permit unlimited access to funds. True savings accounts do not offer cheque-writing privileges, although many institutions will call "savings accounts" their higher-interest demand accounts or money market accounts.

Growth
Lately, high yield savings accounts have achieved widespread use through the Internet. They are usually the main credit instrument for virtual banks. The internet savings account business model are not maintained through a passbook, but have similar features as the branch passbook saving accounts, except that they  offer interest rates generally higher than those available at storefront banks. The growth of online high yield accounts have pushed many brick and mortar banks to create their own high yield savings accounts.

Regulations
In the United States, under Regulation D, 12 CFR 204.2(d)(2), the term "savings deposit" includes a deposit or an account that meets the requirements of Sec. 204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted or authorized to make up to six transfers or withdrawals per month or statement cycle of at least four weeks. The depository institution may authorize up to three of these six transfers to be made by check, draft, debit card, or similar order drawn by the depositor and payable to third parties.

Costs
Withdrawals from a passbook savings account are occasionally costly and are sometimes much higher and more time-consuming than the same financial transaction being performed on a demand account. However, most savings accounts do not limit withdrawals, unlike certificates of deposit. In the United States, violations of Regulation D often involve a service charge, or even a downgrade of the account to a checking account. With online accounts, the main penalty is the time required for the Automated Clearing House to transfer funds from the online account to a "brick and mortar" bank where it can be easily accessed. During the period between when funds are withdrawn from the online bank and transferred to the local bank, no interest is earned.

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