What Are Savings Vaults?

Quick Answer

Savings vaults are a digital banking feature that helps you save toward multiple savings goals at the same time. By maintaining separate sub-accounts, you can set up automatic payments and track your progress.

A man opening a vault door

There are a million reasons to save your money: to hedge against emergencies, make major purchases or fund needed repairs or pay for your upcoming wedding. Savings are the key to reaching many big financial goals—and smaller ones too.

But tracking multiple savings goals in one account can be challenging. Similar to sinking funds, savings vaults allow you to earmark the funds in your savings account for different purposes and work toward multiple goals at once. If you'd like to automate your savings efforts so they're both easier and more precise, savings vaults might be worth a look.

What Is a Savings Vault?

A savings vault is a digital banking feature that helps you track different savings goals within a single account. Savings vaults may look slightly different from bank to bank—and may be called by different names—but generally speaking, they allow you to manage your savings more effectively. You can:

  • Create separate sub-accounts for each savings goal.
  • Keep savings vault balances separate from your available balance, so you know precisely how much you've saved toward each goal.
  • Fund vaults individually using automatic transfers.
  • Transfer money from your vault to checking when you're ready to use it.

Savings vaults aren't available at every financial institution or with every account. But where they are available, they make working toward multiple goals cleaner and simpler. You can see how you're progressing, adjust as you go and know exactly when you've saved up enough to move forward.

Savings vaults pair nicely with high-yield savings accounts, combining the utility of tracking individual goals with the added boost of a high annual percentage yield (APY).

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What Can You Use Savings Vaults for?

You can use savings vaults to save toward any long- or short-term goal—or, more accurately, to save toward multiple goals at once. Here are a few goals you might consider:

  • Emergency fund
  • House down payment
  • Car upgrade
  • Home renovation or maintenance fund
  • Vacation
  • Holiday gifts
  • Wedding
  • Pet expenses

How Savings Vaults Work in Real Life

Say you're trying to maintain your emergency savings, tuck away a few dollars for car repairs and start a fund to replace your refrigerator, which recently started making a wheezing sound that can't be a sign of good health. If your emergency fund is already in decent shape, you might allocate $400 in monthly savings this way:

  • $100 automatic transfer to emergency savings on the first of the month.
  • $100 automatic transfer to your car repair fund on the first of the month.
  • $200 automatic transfer to your refrigerator fund on the 15th of the month.

At this clip, you'll add $1,200 to your emergency savings every year. If you don't need the full $1,200 you're saving for car repairs, you can convert the remaining funds into a down payment when you're ready for a new car. And when you've saved enough for a refrigerator, you can re-allocate those funds toward another goal.

At any point, you can see exactly how much you have saved toward your goals and how long you'll need to reach each one—instead of looking at your account's available balance and estimating how much you can justify using to replace your poor old fridge.

Alternatives to Using Savings Vaults

Say you have a great high-yield savings account but no access to savings vaults. Can you DIY your own? Consider one of these alternatives.

  • Use a personal finance app to track individual savings goals. If your bank or credit union doesn't offer savings vaults (or a similar savings feature), you can use a personal finance app that has savings sub-categories to approximate the experience.
  • Set up a spreadsheet or paper ledger. Manually tracking your savings goals may not be as elegant and motivating as using an automated savings vault, but it will get the job done.
  • Stuff envelopes. This really isn't a practical method for saving toward major goals, but it can work well for micro-savings. Say, for example, you want a slush fund to use for an occasional night out. You can put your spare change and the odd $20 here and there into an envelope and use the cash when you want to treat yourself, guilt-free.
  • Open multiple savings accounts. This requires you to open one savings account for each savings goal. Before you go this way, though, make sure you won't run afoul of minimum balance requirements. Your savings goals will be harder to reach if you have to pay multiple account maintenance fees.
  • Consider CDs for larger, long-term goals. When you open a certificate of deposit (CD), you agree to leave your money in your account, untouched, until the CD's term expires. Because you pay a penalty for withdrawing your money early, CDs aren't great for accessibility. But if you're saving toward a new home in a year and you don't intend to touch your money for a full 12 months, a CD can keep your money separate and will likely pay a great interest rate.

The Bottom Line

Knowing you have money in the bank is one of life's great reassurances. But knowing how much of your money you should leave untouched and how much you can spend makes your savings more useful.

If your savings account offers savings vaults, check them out. And if you're shopping for a high-yield savings account, you might want to look for this feature. You may find a great APY and a better savings experience at the same time.