By Chuck Jaffe, MarketWatch
Savings accounts, literally and figuratively, are the nation’s forgotten investment.

It’s not much of a surprise at a time when an interest rate of 0.25% will put an institution on a list of the country’s “highest-yielding savings accounts.”

Between interest-bearing checking accounts, the advent of online banking, money-market funds and the simple desire to find something that pays better, you might think that savings accounts would simply be dying off. Instead, savings accounts are a bit like cockroaches; despite all best efforts to kill them, they are going to survive somehow and somewhere for a long time to come.

What’s more, this is — for most people — their “mattress money,” the stuff they set aside and don’t want anyone to touch unless they need it for the proverbial rainy day. Putting it in a savings account may not be much better than stuffing the mattress with cash, but it does avoid the problem that made headlines this month, where a woman in China saw termites eat through $65,000 of savings that she had kept in a drawer.

Two studies released this week showed why investors should not be ignoring their savings account, even as they may be frustrated with its potential to generate returns.

The Consumer Federation of America released “Savings Accounts: Their Characteristics and Usefulness,” which showed that simple, basic savings accounts remain an important savings vehicle for most Americans, but especially for low- and moderate-income families. Nearly half of all families had a traditional savings account with a media balance of $2,400; more than one-third of low/moderate-income families had a savings account, with the median balance for that group standing at $800.

That’s hardly big money from an average-dollars-per-account standpoint, which is precisely why the second study, done by BankRate.com, showed that fewer than one-in-four Americans have sufficient emergency savings to cover at least six months’ expenses. Half of all Americans have less than three months’ worth of expenses saved up, while 27% have no emergency savings whatsoever, numbers that have been virtually static over the last three years.

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Of course, if you talk to consumers, they will say that the reason they’re not saving right now has mostly to do with the lousy payout they’ll get. They’ll talk about wanting to invest the money, and then having the ability to use credit cards — or to sell other investments — to get them through any trouble spots.

Poppycock.

In 2006-07 — when interest rates were appreciably higher — BankRate’s studies at the time still showed people with too little emergency savings.

What has changed in those BankRate studies is they now show that consumers are more likely to recognize the importance of having a safety stash.

“What’s alarming is that in the past couple of years — even though people realize how important it is — we haven’t seen the numbers move,” said Greg McBride, senior financial analyst for BankRate.com. “There’s been a shift in the mindset — people know how important it is, and they recognize that and they are not feeling secure about the savings they have — but they’re doing very little to move the needle. I think a lot of it is that people are hemmed in by incomes that are not keeping pace with household expenses so they don’t have a lot of extra cash to funnel into savings.”

The Consumer Federation study shows more about the disconnect.

Executive director Stephen Brobeck, who authored the study, noted that he really wanted to find out why half of the American households have a traditional passbook or statement savings account “when the interest rates paid by the big banks are 0.01%, meaning you get 10 cents in interest on $1,000 in a year.”

“The reason is that every family needs a source of emergency funds to pay for the unexpected expense, the car repair, the emergency dental appointment, even the speeding ticket, whatever,” Brobeck said. “People with discretionary income and larger incomes don’t have to worry, usually, about meeting those unexpected expenditures, but keep in mind that four out of every 10 families have incomes of under $36,000. … Most of those families — even most families with income under $50,000 — struggle to create an emergency fund, and if they don’t have that what do they do? They go out and get a payday loan with a 400% interest rate.”

Perhaps the bigger frustration with savings accounts is that with banks trying to generate their own income at a time when rates are so low, fees and costs can easily swallow up the meager amounts an account can earn.

Brobeck’s study, for example, showed that monthly minimum balance fees run a wide range, with 35% of banks charging at least $5 for each month beneath the minimum. With the very best savings accounts currently yielding about 1% — and typically with a heavy set of conditions to qualify — a fee that high will wipe out more than a year’s worth of interest on a small balance. Conditional fees — for too many transactions in a month, for example — can be equally disheartening.

Brobeck suggested that consumers look for institutions that waive fees and/or increase their interest payout for consumers who arrange to make automatic monthly deposits, “which will let you start to build up the emergency savings you need painlessly, and without worrying that you wind up paying a lot in fees for someone to hold such a small amount of money.”

Because savings account terms frequently are changed — and often are not fully disclosed on an institution’s website — checking in on a savings account to make sure that its conditions still are appropriate is another step to taking the best care of your emergency money.

Ultimately, Brobeck noted that low-income families reported needing emergency savings of roughly $1,500, while moderate and higher-level incomes pegged their appropriate level at $3,000. BankRate’s McBride noted that basing the savings on predicted expenses and then saving anywhere from three to 18 months of those costs — based on perceived job security, expected needs, potential worries and more — will ensure a cushion of the right size.

“When you reach that point, you can consider other alternatives … none of them very attractive in their own right,” Brobeck said, “but emergencies are going to happen, and you need to plan for them first, and most people think about their savings account last and that’s a problem.”