Piggy Banks to Bank Accounts
Learn safe places to keep savings and how a savings account can help money grow.
Reading
0%
Time left
~7 min
Quiz score
0/3
Why piggy banks to bank accounts matters
A piggy bank is a good place to start saving. You put in $5, it stays as $5. You put in $20, you have $25. Simple, safe, easy to check.
But a piggy bank has one limitation: it doesn't grow. The money just sits there.
A savings account does everything a piggy bank does, plus one extra thing: it earns interest. The bank pays you a small percentage of your balance for keeping your money there. The amount is small, but it's free, money you get just for saving.
How interest works
Say your savings account pays 4% APY (annual percentage yield, the yearly rate).
- $100 saved × 4% = $4 interest after one year
- After one year, you have $104 without doing anything extra
- Next year, you earn interest on $104 (not just $100), so it grows a tiny bit faster
This is called compound interest, interest on top of interest. For small amounts it's a small extra. For bigger amounts over many years, it adds up significantly.
Why bank accounts are safer than home
Cash at home can be lost, stolen, or damaged by fire or flood. At an FDIC-insured US bank, eligible deposits are insured up to $250,000 for each depositor, at each insured bank, in each ownership category. An ownership category describes how the account is owned, such as by one person or jointly. Separate accounts in the same category do not each get a new limit. No deposit insurance covers cash kept at home.
What a savings account is not for
A savings account isn't a spending account. You're not meant to dip into it regularly. Some accounts limit how many withdrawals you can make per month. This is actually useful, it keeps the money separate from your everyday spending and makes it harder to accidentally spend your savings.
What to remember
Starting a savings habit with even a small amount matters more than how much you start with. $5/week in a savings account beats $5/week in a piggy bank because the savings account earns interest and keeps the money separate from your daily spending temptation. The habit of moving money to savings regularly is the most important step.
Savings goal
Months to goal: 17 (~1.4 years)
Interest earned (approx.): $69
Timeline
How to think it through
Three places to keep money, ranked by what they offer:
- Piggy bank / home: No interest. No protection. Easy to raid. Good for very short-term or pocket money.
- Savings account: May earn interest. Eligible deposits can be insured when held at an insured bank or credit union within applicable limits. Compare current rates, fees, and access rules.
- Investment account (for much later): Higher potential returns. Some risk. For long-term money you won't need for years.
Which place is better depends on the goal, the account's fees and access rules, and whether a parent or guardian must help open it. A piggy bank can work for a few dollars of near-term spending; an insured savings account can separate a larger goal and may pay interest.
Fun fact
The FDIC insures eligible deposits at insured banks. Federally insured credit unions use a separate program administered by the National Credit Union Administration. The programs have similar standard coverage language but are not the same agency.
You have $60 saved in a piggy bank at home. Your mom offers to help you open a youth savings account at her bank.
What are the benefits of moving your $60 to a savings account?
Practice the idea
Which benefit can an insured savings account provide that cash in a piggy bank cannot?
What can a savings account do that a piggy bank at home cannot?
Why is money kept in a bank generally safer than money kept at home in a piggy bank?
Bring it into your life
Talk to a parent or guardian about opening a youth savings account if you don't already have one. Even $10–$20 is a real start. Ask what interest rate the account pays. Then check: if you saved $100, how much would you earn in a year at that rate? Understanding interest, even on small amounts, prepares you for much bigger savings decisions later.
A savings account can earn interest; in a hypothetical constant 4% APY account, $100 earns about $4 over one year. At an FDIC-insured bank, eligible deposits are generally insured up to $250,000 per depositor, per insured bank, per ownership category. Federally insured credit unions use NCUA coverage rules. Confirm the institution, product, fees, and current APY.
Sources checked
- FDIC: Understanding Deposit Insurance — accessed July 26, 2026
- NCUA: Share Insurance Coverage — accessed July 26, 2026