Everything you need to know about the characteristics of a savings account.
A Savings Account is the most common product offered by any bank in India. It is a fundamental type of bank account with a straightforward idea of depositing & withdrawing money, if and when required. One of the features of a Savings Account is its liquidity, i.e., you can withdraw funds anytime, via ATM. You can also earn interest on your deposits, transfer money online, and choose various types of Savings Accounts based on your needs. Let us look at the various features of a Savings Account in this article.
Below are some of the classic features of a Savings Account:
As pointed out initially, the main purpose of having a Savings Account is to manage your earnings, i.e. sending and receiving money. Your Savings Account serves as a base for all financial transactions and cuts down your dependency on cash. These transactions can be done quickly and easily via banking services like net banking (NEFT/RTGS/IMPS facilities), ATM-cum-debit card, cheque or even a cash withdrawal slip. Additionally, for bill payments, banks are now offering dedicated payment facilities that allow customers to set standing instructions for paying utility bills like electricity, water, phone, etc.
Every Savings Account in India offers an interest rate ranging from 3 to 7 per cent. This rate varies from bank to bank and often depends on the decision of the Reserve Bank of India on repo and reverse repo rates. The interest earnings allow customers to earn some money on their deposits and gradually grow their savings.
Banks give every Savings Account holder an ATM/Debit Card. This card can be used to withdraw cash from ATMs, make payments at retail stores, and even initiate online payments via a payment gateway.
While withdrawing cash, you can either find an ATM branch of your bank or even access your account from another bank ATM if you need funds urgently.
Every Savings Bank Account comes with a passbook and cheque facility. A passbook is your account statement listing all your transactions, and a cheque is a written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or account holder.
As the usage of passbooks and cheques is reducing, the significance of net banking and mobile banking is simultaneously increasing. Every bank provides net banking and/or mobile banking facilities with your Savings Account if you opt for it. These internet banking facilities empower you to send and receive payments by simply logging in to your account online.
Mobile Banking makes your experience even smoother as you can download the mobile application of your bank on your phone and access your account anytime. You can use this app for almost every service related to your Savings account, including sending & receiving payments, viewing account statements, raising a complaint, and more.
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While you can opt for a ‘zero minimum balance Savings Accounts’ offered by many banks these days, most Regular Savings Accounts require holders to maintain a minimum average balance. Failing to maintain the balance subjects the holder to a penalty. The minimum average balance and the penalty differ across banks.
Since there is a considerable demand for Savings Account among the public, banks offer different types of Savings Accounts to assist their customers with unique needs and requirements. Such Savings Accounts include Regular Savings Accounts, Salary Accounts, Kids Savings Accounts, Women’s Savings Accounts, Senior Citizens Savings Accounts, Premium Savings Accounts, and more. You can also choose from various types of zero-balance accounts (besides the salary account) launched by the central government from time to time/ For instance – the Pradhan Mantri Jan Dhan Yojana is a zero-balance account launched by the government. You can open this account at almost all banks in India.
While we now know what are the features of a Savings Account, let us try and understand its various benefits. From liquidity to the safety of funds, a Savings Account comes with a lot of advantages –
From safekeeping of surplus money that can be used any time in the future to a base for carrying all kinds of financial transactions, different customers use Savings Account for various reasons. Almost everyone needs a Savings Account at some point in their life. If you do not own one yet, open a Savings Account today and start saving.
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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.