Savings accounts offer slightly different benefits and are used for slightly different purposes than checking accounts. The basic premise of a savings account is that it allows people a way to set aside excess funds and earn interest or obtain benefits from the bank that holds the funds. Many people do not understand why banks pay interest on accounts. Essentially banks are money distributors.

They acquire funds at wholesale prices from people who deposit into checking and savings accounts. To get people to deposit funds, banks offer incentives such as interest. Banks then use the funds to provide loans or make investments that provide greater returns than what the money cost them to obtain. Understanding the basic business model that businesses operate with, it is easier for consumers and businesses to see how savings accounts work.

The more funds a consumer or business has to deposit into their checking or savings account, the more bargaining power they have with banks. This is why most banks offered tiered interest programs that pay higher rates for people than retain more funds in their accounts. Other banks charge service and other fees for customers who do not maintain minimum balance levels or reach other basis account requirements.

Savings accounts general start at a basic level. Most banks have simple savings accounts that provide a very small interest payment for consumers while offering a low minimum balance requirement. Interest rates usually rise as balances rise, but at a point, it is better for consumers for more opportune ways to set aside money. It is important for consumers and businesses to consider their savings needs and their desired benefits and then find the right bank and account to match those needs. Saving money has become more challenging in today's spend-happy and credit reliant consumer world. It is hard to justify saving money at less than one per cent interest while making credit payments with significantly higher interest rates. As credit card and loan balances are at all-time highs, it has become harder for people to save.

However, it is still a good idea for everyone to set aside a little money at least for a 'rainy day fund'. Most financial experts recommend people maintain a 3-6 months savings relief fund in the event of a job loss or other financial event that could be devastating otherwise. Therefore, most people should have some type of savings account.