Passbook Savings AccountsPosted on August 31st, 2010 William No comments
A passbook savings account is simply a savings account in which deposits and withdrawals are recorded in the depositor's passbook. In other words, this is how savings accounts were done in the dark ages before online banking and internet savings accounts! The bank customer would use the passbook to keep a running statement of all credits and debits to his account, including deposits, withdrawals, and interest.
While it would seem as if such things are totally outdated, in fact a number of banks still offer them. NVE Bank, for example, offers a passbook savings account that requires only $10 to open and has no minimum balance; Adirondack Trust has a similar offering that can be started with as little as a penny. Passbook savings accounts do have some advantages; for example, because checks cannot be written against them, it takes a fair amount of effort to withdraw money, which encourages customers to save; unfortunately, many also generally do not accept direct deposits, so you do have to actually go to the bank and deposit money into the account. If you're the type of person who has trouble saving but needs to be able to get to your money quickly in an emergency, a passbook savings account could be perfect for you; just find a bank that offers direct deposits (convenient) but makes you visit a teller for withdrawals (inconvenient). Since holders of passbook savings accounts generally do not receive statements in the mail, this can also be convenient for those who move around a lot and may not have a permanent mailing address.
This type of account may also be suitable for children, as a way of teaching them to manage money before they're old enough to take on the responsibility of balancing a checkbook.