Definition
A deposit account for money you plan to keep, which pays interest and usually allows fewer withdrawals than a checking account.
What it means
A savings account holds money you do not need for daily spending, such as an emergency fund or money for a goal. The bank pays interest, shown as an annual percentage yield (APY), and rates differ a lot from one bank to another. Some online banks and credit unions pay much more than the national average, while others pay close to zero. A bank may limit how many withdrawals or transfers you make each month and may charge a fee if you go over. Savings at an FDIC-insured bank are covered up to $250,000 per depositor, per bank, per ownership category, and credit union accounts have similar NCUA coverage. Interest you earn is taxable income, and the bank sends Form 1099-INT if you earn $10 or more in a year.
Example
Keeping $5,000 in a savings account that pays 4.00% APY earns about $200 in one year. At 0.40% APY the same money earns about $20.
Illustrative numbers only. Your situation will differ.