Passbook

A passbook is a book issued by a bank to record deposits, withdrawals, and interest earned in a savings account, typically known as a passbook savings account. It lists the depositor's name, account number, and all transactions.
On this page

Passbook

A passbook is a physical booklet provided by a bank that records all transactions made for a savings account. It was traditionally used to keep track of deposits, withdrawals, and interest earned. Passbook savings accounts are known for offering low yields, but they are very secure because deposits in passbook accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.

Key Features

  • Depositor’s Information: Contains the depositor’s name and account number.
  • Transaction Records: Lists all deposits, withdrawals, and interest earned.
  • Security: Insured by the FDIC up to $250,000.
  • Yield: Typically, passbook savings accounts offer lower interest rates compared to other types of savings vehicles.

Examples

  1. Jane Doe’s Passbook Savings Account: Jane deposits $1,000 in her passbook savings account. Over time, she makes several deposits and withdrawals, and each of these transactions is recorded in her passbook along with the interest earned.

  2. ABC Bank: ABC Bank provides each customer with a passbook when they open a savings account. This allows the customer to maintain a physical record of all transactions conducted in their account.

Frequently Asked Questions (FAQs)

Q1: What is a passbook savings account? A1: A passbook savings account is a type of savings account where transactions are recorded in a physical passbook provided by the bank.

Q2: Are passbook savings accounts safe? A2: Yes, passbook savings accounts are safe as deposits in them are insured by the FDIC up to $250,000.

Q3: Do passbook savings accounts offer high-interest rates? A3: No, passbook savings accounts typically offer lower interest rates compared to other types of savings accounts.

Q4: How do I update my passbook? A4: To update your passbook, you need to visit your bank and present it to a teller who will manually record or print the latest transactions.

Q5: Can I use a passbook savings account for electronic transactions? A5: While passbook savings accounts are traditionally not used for electronic transactions, many banks now offer online access to these accounts.

  • Federal Deposit Insurance Corporation (FDIC): A U.S. government corporation providing deposit insurance to depositors in U.S. commercial banks and savings institutions.
  • Savings Account: A bank account that earns interest on the deposited funds.
  • Interest Earned: The amount of interest paid by the bank to the account holder, based on the account balance over time.
  • Deposit: Funds added to a bank account.
  • Withdrawal: The act of taking money out of a bank account.

Online References

Suggested Books for Further Studies

  1. “Bank Management and Financial Services” by Peter Rose and Sylvia Hudgins
  2. “Understanding Money and Banking” by Evan Fred
  3. “Principles of Banking” by American Bankers Association

Fundamentals of Passbook: Banking Basics Quiz

Loading quiz…

Thank you for learning about the fundamentals of passbooks and testing your understanding with our quiz. Continue to improve your knowledge on banking and financial instruments!

Passed Dividend
Pass-Throughs