What is a Passbook Savings Account? - MagnifyMoney
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What Is a Passbook Savings Account and Can You Still Open One?

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Before banking moved into the realm of computers and mobile phones, people tracked their account balances by hand. While you might be familiar with how someone uses a checkbook for their checking accounts, there’s a similar tool for old-school savings accounts.

A passbook savings account works like a normal savings account, but it comes with a notebook ledger called a passbook that allows you to track deposits and withdrawals by hand. While these accounts are quite rare — because banks now record your balance history automatically — a few banks and credit unions still offer them.

What’s unique about a passbook savings account?

The main difference between a passbook savings account and a traditional savings account is that you’ll receive a passbook when you open your account. Most banking customers prefer to have their bank or credit union provide their account history online, but if you want to bank in person and avoid relying on technology, a passbook savings account might be worth considering.

If you have a passbook, you might be limited to in-person deposits and withdrawals since some financial institutions require you to have the passbook with you for those transactions. If you open a passbook savings account, ensure you can get to a branch whenever you need to use your account. Some passbook accounts enable automatic transfers for deposits.

Beyond the passbook, there are a lot of similarities between passbook savings accounts and other savings accounts. They’re designed for long-term deposits: you earn interest on the balance, and there are some limits as to how often you withdraw your money. Like other savings accounts, passbook accounts may have some potential fees or minimum opening deposit requirements.

How does a passbook savings account work?

You’ll rely on a passbook to track your transactions, so it’s important to make sure you make note of any deposits, withdrawals or interest payments. Each bank or credit union might have a different format for their passbooks, but chances are you’ll have space to write down:

  • The date of the transaction
  • The type of transaction
  • The change to your account balance
  • Your new account balance

Many financial institutions require you to bring your passbook to a branch to deposit or withdraw money, which limits your options when accessing your savings. Bank accounts typically allow you to make electronic transactions to add funds or move money — but passbook savings accounts do not.

Pros and cons of a passbook savings account

Here are the key advantages and disadvantages of these accounts to keep in mind when considering whether to open them.

ProsCons
Passbook tracks withdrawals and depositsMust have passbook for transactions
Allows you to avoid online and mobile bankingLower interest rates than other savings
Good for teaching kids about bankingNot offered by many financial institutions

Do passbook savings accounts have better rates?

They usually don’t have better rates than other kinds of deposit accounts. Certificates of deposit (CDs) generally give savers the best rates, but you have to keep your money in the account for a set term to avoid a penalty.

Savings accounts and money market accounts are more comparable to passbook accounts. Money market accounts typically pay a slightly higher interest rate than savings accounts. The online savings and money market accounts with the best rates pay much more interest than passbook savings accounts, but some banks and credit unions offer competitive rates for all of them.

Where can I find a passbook savings account?

You’re unlikely to find many national banks that offer this type of account, but some local banks and credit unions do. For example, First Republic and Cathay Bank are two banks that provide them. They have branches in large states like California, Illinois, Florida, New York and Texas, but neither has a national footprint.

You can find out if a local bank or credit union offers a passbook checking account by visiting a branch, calling a customer support line or doing some research online.

Passbook savings account alternatives

There are other kinds of savings accounts, including high-yield, business and savings accounts for kids. Most other savings accounts would be a decent alternative if you don’t want to deal with the hassle of using a passbook.

Money market accounts could be another option as well. If you’re looking for an account you can use for everyday banking transactions, a checking account would be your best bet.