Passbook Savings Accounts

If your first savings account was a passbook account, you may have moved onto another type of account and not realized that they still exist. Although passbook savings accounts have decreased in popularity in recent years, they may be on the rise again. The reasons for renewed interest in passbook savings accounts are largely due to the safety and simplicity that comes from their straightforward design.

A passbook savings account functions with a very basic design. Upon opening a passbook savings account, you receive a ledger or booklet that is used to record all deposits and withdrawals. In the age of online and mobile banking tools with ATMs on every street corner, this may seem old-fashioned, but there are many advantages to this style of saving.

Although passbook savings accounts have decreased in popularity in recent years, they may be on the rise again.“Passbook savings customers represent all ages and household incomes. Approximately 10 percent of our savings customers have passbook accounts,” stated Geoffrey Thomas, executive vice president and head of everyday banking at RBS Citizens Financial Group.

Some proponents of passbook accounts enjoy the transparency that they get with a passbook account, and many enjoy the face-to-face transactions that are required to withdraw or deposit money. These in-person interactions allow passbook users to immediately review the information that went into their ledger instead of waiting for it to show up online or in the mail to determine if it is correct.

Although ATMs and online banking tools can be convenient, they don’t always work properly. Furthermore, if you’re charged a fee for using an ATM from a different institution, you probably already make special trips to your financial institution to use the ATM. If you’re already in the habit of stopping by your financial institution regularly, it doesn’t take much more time to skip the outdoor ATM and head inside to speak with a teller.

Many people find this straightforward process easier to navigate than ATMs or online tools. Passbook savings accounts can be especially helpful to people whose first language is not offered on their financial institution’s ATMs. They’re also useful to people who aren’t comfortable using computers.

The simple process also makes passbook accounts a perfect way to introduce children to the world of savings and financial responsibility. The ability to examine a physical ledger helps children understand exactly why their account balance moves the way it does and can get them excited about saving instead of spending. Furthermore, the low minimum balance found with many passbook accounts allows parents to start their children off saving without having to use a large chunk of their own savings.

“For example, to open a children’s passbook savings account at one bank, all you need is $10 to open the account. In addition, there are no monthly fees, which makes it appealing to parents…” reports Donna Fuscaldo for

Passbook accounts may even encourage people to save more. The ledger that comes with the account is concrete and tangible, allowing users to hold onto a printed record that shows how their savings have grown. Being in close contact with a record of savings can help some people find the motivation to save more, whereas people with online accounts may not even be aware of their current balance.

The fact that transactions must be made in-person can also facilitate savings. “This helps you save your money because it is less likely that you will make a frivolous purchase,” according to eHow contributor Jessica Broadmoor. “If you want to make a withdrawal, you’ll have to go to the bank, fill out a slip, and hand it to the teller. The transaction is entered in the passbook. This gives you more time to think about the transaction than if you simply swipe a card.”

In addition to these benefits, many people feel that passbook accounts are safer than other methods of saving. If you bank online, you have to be very careful that the network you access your account on is secure, that nobody is able to steal your password and that you aren’t the victim of hacking. Even if you don’t use online banking, it is possible to fall victim to identity theft.

“Identity theft is a major problem, and one source is stolen monthly bank statements from mailboxes,” states Fuscaldo. “…with a passbook savings account, you aren’t mailed a monthly bank statement. All of the information is printed in the passbook, eliminating the need for the statements.”

The fact that passbook accounts don’t involve debit cards and require getting to know the tellers at your financial institution can also help keep your money safe and provide peace of mind. “A lost passbook is safer than a lost ATM card,” Fuscaldo states. “That’s because the holder of the account has to come in to the branch to withdraw the money.”


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