A payroll savings program is a method of automatically deducting money from one's paycheck and depositing it into a savings account. Since these funds are made less available there is a reduced chance that they will be spent.
A paycheck is traditionally a paper document issued by an employer to pay an employee for services rendered. While most common being used in the United States, recently the physical paycheck has been increasingly replaced by electronic direct deposit.
In most countries with a developed wire transfer system, e.g. in Europe, using a physical cheques for paying wages and salaries are and have been uncommon for the past several decades.
This takes the responsibility for the deduction of money from an employees paycheck and subsequent electronic transfer into a high interest savings account out of the employees hands and therefore reduces the temptation to spend.
Such payroll savings schemes are often provided by government agencies such as the Canada Payroll Savings Programs run by the Canada Investment and Savings, an operating agency of the Government of Canada. Most banks provide their customers with access to high interest savings accounts such as ISA’s in the UK but it is left up to the individual to put money in, even a direct debit can be cancelled easily enough therefore increasing temptation.
Savings accounts are accounts maintained by commercial banks, savings and loan associations, credit unions, and mutual savings banks that pay interest but can not be used directly as money (by, for example, writing a cheque). These accounts let customers set aside a portion of their liquid assets that could be used to make purchases while earning a monetary return.
Obtaining funds held in a savings account may not be as convenient as from a demand account. For example, one may need to visit an ATM or bank branch, instead of writing a cheque or using a debit card. However, this transference is easy enough that savings accounts are often termed near money.
Some savings accounts require funds to be kept on deposit for a minimum length of time, but most permit unlimited access to funds. True savings accounts do not offer cheque-writing privileges, although many institutions will call "savings accounts" their higher-interest demand accounts or money market accounts.
All savings accounts offer itemized lists of all financial transactions, traditionally through a passbook, but also through a bank statement.
With the advent of the Internet, high yield savings accounts have become more prevalent from virtual banks. ING Direct was the first online high yield savings account provider, beginning operations in the United States in 2000 and expanding to Australia, Canada, France, Germany, Spain, and the United Kingdom. ING's business model is to pay competitive rates (though not necessarily the highest in each market) while maintaining very few retail locations and keeping customer service costs low through automated and computer systems. The growth of online high yield accounts have pushed many brick and mortar banks to create their own high yield savings accounts.