A saving account is the most common type of bank account one can have. Savings accounts permit an account holder to keep his money in a safe and secure place where he or she can even it earn a small percentage of return each month. Saving accounts generally entail a minimum balance, for instance like US$25, or Sometimes there may be no need to maintain a minimum balance requirement. All depends upon the bank and the type of account account holder possesses. The basic positivity of keeping such accounts is that they are insured by the federal government agency of a country. This means that in case if a bank goes out of function (which is a remote possibility) the money will still be secured.

When someone puts the money in a savings account it earns a return. The money which the account holder has kept in the bank account is utilised by the banks to impart loans to other this does not mean that the money of the account holder is stuck. An account holder can take out the money whenever he feels like under certain conditions. This is the way banks make money.

 A saving account works as follows:
 
1. An individual opens a money market account in a bank.
2. On that account the bank pays a return or an interest on the money deposited
3. The bank then lends out the loans from that money to other people on which it charges a comparatively high rate of interest than what an account holder gets from the bank.

The difference between the two interests is the business of the banks en masse. Interest on such an account is compounded daily and generally paid monthly. Following is the formula for the calculation of compound interest.

Daily compounding = Principal (1 + interest rate/365)365 = (daily compounded amount)

Banks typically proffer two types of savings accounts; first is a basic savings account, and the other one is a money market account. The basic savings account is sometimes referred to a passbook savings account
 
Money Market accounts generally pay more return as interest, but for that matter one has to keep a handsome amount in this type of account. Furthermore, one has a limited access to withdrawals in a month whereas the account holder can write three checks on a money market account in a month’s time. Not all the time, banks incur fees for holding a savings account. The fee may vary on bank to bank basis so it’s better to do the complete research before opening an account with a certain bank.

Once a customer opens a savings account, he gets a small book known as a register when he or she can write his or her starting balance i.e. the initial deposited money and this exercise would be carried on to all of the future withdrawals and deposits future deposits and withdrawals in order to keep a track. Each month, the respective bank sends a statement of the account either through post mail or e-mail whatever the customer prefers. The statement will carry all the transactions details as well as the fees incurred and the interest earned on the account. One can double check the statement with the register in order to double check the transactions executed. This method of tallying is known as reconciling the savings account.

In addition to the above mentioned savings accounts, quite a number of banks proffer a High Yield Savings Account which can be considered as best saving account. The term “high yield savings account” is just another name of saving account which offers attractive returns. The key perks to these accounts are typically higher APY (Annual Percentage Yield)

The criteria which banks have laid to qualify for opening such an account is that one should have large amount of initial deposit. One has to maintain a high balance over the time where transactions are to be quite limited. One has to maintain other banking relations with that bank as well. Banks usually offer such accounts to their highly valued clientele.