How Does a Savings Account Work?

If you’re saving for a rainy day or working toward a long-term financial goal, the right savings account could give your efforts a boost. A savings account provides a safe place to put aside money so you’re less tempted to spend it. There are, however, different types of savings accounts, so it’s important to choose one that’s right for you.

Key Takeaways

• A savings account is a safe, convenient place to store money you may need within the next five years.
• There are different types of savings accounts, each with unique features and benefits.
• You should choose an account that fits your lifestyle and aligns with your financial goals.
• Features such as automatic transfers from checking to savings can make it easier to save.

What is a savings account?

Nearly 60% of adults in the U.S. have some type of savings account, according to a 2025 study by the Federal Reserve. If you’re one of them, you can use it to access your funds when needed—whether by depositing and withdrawing money at a bank branch or transferring funds online or through apps, such as the Fifth Third Mobile Banking App.

Money deposited in a savings account also earns interest. 

But some types of savings accounts may suit your lifestyle better than others. For example, one savings account may limit the number of withdrawals you can make in a month while another may penalize you if you withdraw your money before a certain date. That’s why it’s important to choose the account that will best meet your needs.

Why use a savings account? 

While investment accounts are ideal for money you won’t need for at least five years, savings accounts are better suited for cash you may need sooner—such as for an emergency expense, a down payment for a house or a vacation. Opening a savings account can also help you become more financially disciplined. In fact, those with a rainy day fund are less likely to overspend, the Federal Reserve report found.

Deposits of up to $250,000 are insured by the Federal Deposit Insurance Corporation, making a savings account one of the safest places to keep your money. 

Benefits of a savings account

There are several ways a savings account can work to your advantage:

• The interest earned can help your savings grow.
• It gives you easy access to money for unexpected expenses such as a car repair or a medical emergency.
• It lets you separate funds from the money you use for everyday spending.
• It can be set up to receive automatic transfers from your checking account. For example, you can have money automatically transferred between your Fifth Third Momentum^® Checking and Savings Accounts whenever you deposit a paycheck.

Types of savings account 

When choosing a savings account, consider what you want to achieve with your finances. Here are some account options to consider. 

Traditional savings account 

A traditional savings account may be the best choice if you are looking for a straightforward way to maximize your savings. It also can help you establish a relationship with a bank that offers a wide array of services, such as mortgages, car loans and credit cards. These accounts typically don’t require you to maintain a minimum balance, but they pay the lowest annual percentage yield (APY), or interest rate, among savings accounts. You often can earn a slightly higher interest rate if you also have a linked checking account at the same bank.

Fifth Third Bank also offers access to a nationwide network of fee-free ATMs, where you can make deposits—including cash—or withdrawals. If you need an emergency infusion of cash, for example, you could transfer money from your savings account to your checking account using your Fifth Third Mobile App and withdraw it from an ATM.

High-Yield savings accounts 

High-yield savings accounts typically pay higher interest rates than traditional savings accounts but are very low risk options. They can be a great place to store an emergency fund or savings you might need to access soon.

Money market accounts

A money market account pays some of the best interest rates for a savings account, but it also usually has minimum deposit and balance requirements. These accounts come with debit cards and checks, but they typically limit the number of monthly debit card purchases, check withdrawals and electronic transfers.

Certificates of deposit 

Certificates of deposit (CDs) pay among the highest interest rates. But you’ll have to commit to keeping your money in the CD for a fixed period. When you cash in a CD after it matures, you receive your original deposit plus the interest. If you withdraw the money early, you will pay a penalty.

How to choose the right savings account 

Your savings account should fit your lifestyle and make managing your money easier. Ask these key questions to help find the savings account that best fits your goals.

• Is there an initial deposit requirement?
• Are there monthly limits on withdrawals?
• Do I have to maintain a minimum balance?
• Are there maintenance fees?
• Can I make transactions through mobile apps?
• Will I earn high interest?

How to make the most of your savings account 

Once you open a savings account, make sure you take advantage of its features. Setting up automatic deposits through Fifth Third Smart Savings lets you put away a certain amount on a regular basis without having to think about it. You can also dedicate a savings account to a particular goal such as building an emergency fund or saving for a vacation. By making regular contributions, you’ll be on your way to reaching your financial goals.

Open a savings account with Fifth Third

A savings account can be a great way to start growing your nest egg and help achieve your financial goals. It’s easy to start saving when you can visualize your goals with an account like the Fifth Third Momentum® Savings Account, where you can set up automatic transfers to your savings goals using Smart Savings. This will help you track your budget while setting up an emergency fund and accomplishing your future financial objectives.

Looking to open a savings account? Find out which savings account is the best option for you.

Three Things to Do:

• Learn how the Fifth Third Momentum® Checking and Savings Accounts can help you reach your goals.
• Calculate how long it will take you to save for a financial goal.
• Explore the differences between a traditional savings account and a CD.