<prompt> Human: If I put money in a savings account, wont I lose money? Since inflation rates are higher than interest rates, my money will lose its value. Ill just be losing less money. Please someone tell me where I am wrong, otherwise it makes no sense.  <response>: Yes, if inflation is higher than the interest rate, your money will lose value over time. But it will lose value more slowly than if you kept it in cash under your mattress, which is one advantage of a savings account. Because it wont keep up with inflation, the general recommendation here is to use savings accounts for money you need short-term access to paying expenses 6-month emergency fund, and to invest your long-term savings in a combination of stock and bond index funds, which will be much more likely to beat inflation in the long run. If you dont want the risk of stocks or inflationary risk, TIPS and I-Bonds will protect your money from inflation, with the trade-off of being somewhat less liquid than a savings account. 