What Are Microsavings Accounts?

Microsavings Accounts Explained in Less Than 5 Minutes

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Microsavings accounts are deposit accounts that encourage people to save in smaller increments.

Definition and Example of Microsavings Accounts

Microsavings accounts are similar to traditional savings accounts but are specifically designed to hold smaller deposits. These accounts are designed to remove obstacles that make saving money challenging for some. Key characteristics of microsavings accounts include no minimum deposit requirements, no service fees, and flexible withdrawals. These accounts may or may not earn interest.

Here's an example. Instead of using $100 or $500 to open a savings account at a bank, you may be able to open a microsavings account through a savings app on your phone with just $1. You link the app to your debit card or checking account. The app then saves small amounts of money for you automatically in a separate savings account.

How Microsavings Accounts Work

Microsavings accounts can be offered by banks or credit unions. Most commonly, they're offered through mobile savings apps.

Microsavings is related to microfinance. The concept of microfinance has its origins in discussions of "unbanked" and "underbanked" communities. "Unbanked" refers to people who may forgo traditional banking services or lack access to them altogether. This includes people who don't have a checking account or a traditional savings account. "Underbanked" refers to people who use alternative financial services. In a 2019 survey, the Federal Deposit Insurance Corporation (FDIC) found that about 5.4% of U.S. households, or 7.1 million households, were unbanked at the time.

For those people, or for anyone who struggles to set money aside because they live paycheck to paycheck, microsavings can offer an opportunity to save money.


Before signing up for a microsavings account through an app, check to see if the account is FDIC insured. It protects your money if the bank or app goes under.

For example, let's say you download a microsavings app and create an account. Then, you link your debit card or checking account to the app.

At this point, how you save money depends on the way the app works. Some microsavings apps help you save by rounding up transactions. For instance, if you make a purchase for $21.35, the app might round that amount up to $22 and deposit the difference of 65 cents in a separate savings account. The idea is that you have a digital piggy bank where you save your spare change.

Other microfinance apps may scan your bank account transactions for you to find money that you can afford to save. Once the app finds extra money, it will transfer that amount for you automatically to a linked savings account.

And other microsavings apps work by allowing you to set specific savings goals. Then, you can set different rules or triggers for when money should be transferred to savings. For example, you might use an app that lets you reward yourself with a $5 deposit to savings when you skip buying your morning coffee.

Microinvesting is a relative of microsavings. With microinvesting apps, your money doesn't go into a savings account. Instead, it goes into a linked investment account where it may be invested in stocks or exchange-traded funds (ETFs). These types of microsavings apps are designed to appeal to people who want to build wealth in the stock market but don't have a lot to invest all at once.


If you're using microinvesting apps to invest in stocks or ETFs, be sure to understand the risks involved first. You can check to see if the platform is registered with FINRA or the Securities and Exchange Commission (SEC).

Benefits of Microsavings Accounts

The primary benefit of microsavings accounts is that they can make saving money a realistic goal. Since saving is usually automatic, you don't have to remind yourself to save. And because you can save smaller amounts, it may be easier to grow savings on a tight budget.

So who are these apps potentially good for? Microsavings apps may be more attractive for some people than others.

You might consider using a microsavings app if:

  • You've struggled with getting into a regular savings habit
  • You want to be able to save money consistently in smaller amounts
  • You'd like to keep your savings separate from the rest of your money so that there's less temptation to spend
  • You're comfortable managing your money through a mobile app
  • You've been denied a savings account at a regular bank because of a negative ChexSystems report

Here's another way to put the benefits of microsavings accounts in perspective. In November 2020, about 64% of Americans said they could handle a $400 expense by paying cash or withdrawing money from a savings account, according to the Federal Reserve. But 21% said they would either have to borrow, sell something, or forego the expense altogether. Having a microsavings account could help you avoid falling into the second group.

And if you're using a microsavings account that pays interest, that could help you grow your money faster. Before getting started with a microsavings account or app, check to see if you'll earn interest and what fees you might pay, if any. But keep in mind: With these types of financial apps, the emphasis is more on making saving a habit rather than earning a higher annual percentage yield (APY).

How To Get a Microsavings Account

You can get a microsavings account in a couple of ways. One popular way is to use a microsavings app. Some microsavings apps include:

  • Acorns
  • SmartyPig
  • Digit
  • Qapital

Although each app works slightly differently, each offers you a way to set aside a little money, whether it's through rounding up (like Acorns) or allocating some of your paycheck (like Qapital).

If you have a bank account, see if your bank offers a microsavings option that can help you automate your savings.

Key Takeaways

  • Microsavings accounts are designed to remove barriers for those who struggle to save money.
  • Compared to traditional savings accounts, microsavings accounts may have lower minimum deposit requirements and fewer fees.
  • Microsavings apps can help you save money automatically in small amounts based on what you can afford.
  • Microinvesting apps can also help you save automatically, though your money is invested rather than held in a savings account.
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Deposit Insurance Corporation. "How America Banks: Household Use of Banking and Financial Services."

  2. Board of Governors of the Federal Reserve System. "Economic Well-Being of U.S. Households in 2020—May 2021."

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