A passbook savings account is one where the balance of the savings account, including interest, is recorded in a passbook. The passbook keep track of each credit or debit to the account, including deposits and withdrawals, by keeping a running total of the passbook savings account activity and a recording of each transaction.
History of the Passbook Savings Account
In years past, the passbook savings account was the type of savings account most people utilized. In fact, the passbook savings account dates back to the 19th century. Prior to the implementation of check printing and bank stamping machines, entries were hand-written in the passbook by the bank teller.
Between the mid 1960s and early 1970s, banks began using an automatic stamping machine to enter the ongoing balance into the customer’s passbook. Tellers no longer needed to hand-write the customer’s balance into the passbook.
Are Passbook Savings Accounts Still Available?
The passbook savings account is an ideal banking solution for customers who do not make very many transactions with their savings account. For those who regularly interact with their savings account, perhaps online, monthly statements are most likely the way to go.
Some modern banks still offer the passbook savings account. However, most savings accounts utilize paper or electronic statements that are regularly processed, usually once per month, and mailed or emailed to customers. Because fewer interactions with tellers are necessary due to access to banking functions over the Internet, the passbook savings account is no longer convenient. Paper and electronic statements are much more versatile. However, if you feel that you need a passbook savings account, some banks still do offer this type of account.
Passbook Savings Account and Interest
The passbook savings account earns interest on the money that is deposited into the account. Whether you receive electronic or paper statements, or if your balance is recorded in a passbook, interest earned is recorded as a credit to your account.
The interest that is paid on a passbook savings account is determined by the interest rate that your bank is adhering to. Interest rates are variable. Call your bank to find out the interest rate they are paying for a savings account. Usually, savings accounts of any type will pay between 3% and 5% interest on the money you are saving in the account. Some accounts pay more and some may pay less.
What are Passbook Savings Accounts Good For?
Passbook savings accounts are great for opening a savings account for a grandchild or another small child. The passbook gives the child a tangible way to know that they have money in the bank. Passbook savings accounts are also great for those who want to create a savings account and leave the money in the bank. If you are the type of person who likes to squirrel away money into a savings account and basically forget about it, the passbook savings account might be just the account for you.
Passbook savings accounts are also for those who feel more secure dealing with banking the way it used to be. Customers often view a passbook savings account as a friendlier alternative to the standard statement savings account. Some human interaction is involved when you have a passbook savings account. You may wish to see the teller to deposit money into the account.