A detailed guide on Savings Account: Types, Benefits, Features and more
Thanks to technological advancements, the world of banking is a lot easier to access now. The convenience of cash withdrawal at any time at an ATM near you is perhaps the most visible face of the ease of banking. Be it money transfers or paying your utility bills, you can do it all 24x7 from the comforts of your home. Banks offer a host of services and accounts, but the most common one is the savings account, which serves as the stepping stone to the world of banking. Let us decode savings account meaning, types, benefits and more, in this article.
As is apparent from the name, a Savings Account is a type of bank account where you can save or park your money freely. It also allows you to earn a moderate interest rate along with the liberty of withdrawing money whenever you need it. Besides enabling you to save money, the savings account also equips you with several other facilities that make banking convenient.
Having explained what is savings bank account, let us now examine its benefits. As a cash management tool, your Savings Account can facilitate you in multiple ways.
A Savings account is a good place to park money for emergencies. It has high liquidity coupled with high daily withdrawal limits, which means that you can withdraw cash anytime.
Savings Accounts are highly safe and secure places to park your money. You can deposit any amount of money in your account without worrying about limits or caps.
A Savings Account rewards you for depositing money in the form of interest on savings. The interest is credited semi-annually or annually, depending on the type of savings account you have.
Today, it is very easy to open a Savings Account. You can open an account online from the comfort of your home simply by filling a form, submitting scanned copies of your documents, and completing a quick eKYC process. You no longer need to visit a bank to open the account.
Most saving accounts come with a debit + ATM card for easy cash withdrawals, giving you access to cashback and reward points. Moreover, you can order demand drafts, open Recurring Deposits and Fixed Deposits, and make inter and intra-bank transfers with net banking facilities.
As a highly liquid account, a Savings Account keeps you better prepared to meet emergency needs. You can withdraw cash anytime, with high daily withdrawal limits on your debit card. Moreover, there is no withdrawal limit if you choose to withdraw cash physically from the bank branch.
An added benefit of Savings Accounts holders is that they get discounts on bank lockers rentals for maintaining a minimum quarterly balance.
Besides knowing the Savings Account definition, let us all assess its many features. They are as under:
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Primarily, there are five types of Savings Accounts. They are as under:
A Regular Savings Account empowers you to deposit money at your convenience. Interest is paid every month on the balances maintained in the account but is credited annually or semi-annually. You are required to maintain a prescribed minimum amount of balance in the Savings Account, failing which you will have to pay the penalty levied by the bank. You get all the basic facilities like a free cheque book, passbook, ATM card, etc., with your Regular Savings Account.
Generally, employers create salary Savings Accounts for employees. The key benefit of a salary account is the no minimum balance requirement feature, which is why it is also known as a zero balance account. If no salary gets credited to the account for three consecutive months, this salary account will be auto-converted into a Regular Savings Account. As such, you will have to comply with the rules of a regular account and maintain the minimum balance required.
This account is specially designed for senior citizen account holders and comes with certain extra benefits. Prominently, it offers higher interest rates on the savings parked. Also, there is usually no minimum balance requirement. Account-holders can also link this account to their pension funds.
A Savings Account for children is like a regular Savings Account but without any average balance requirement. You can open this account for your children. The minor should be named as the primary account holder, while you, as the parent or guardian, can serve as the joint holder. Note that once the minor turns 18, the Savings account for children is converted into a Regular Savings Account.
Designed especially for women, and to encourage them to open their own accounts, the Savings Account for Women come with a host of facilities. These include high daily ATM withdrawal limits and debit card transactions at retail outlets. Women may also get slightly higher interest on their deposits, along with extra reward points, shopping discounts and more, with this account.
As proof of address, you have to submit photocopies of specific documents, as mentioned in the account opening form. The following address proof documents are accepted.
An ID proof document is one which has your photograph affixed on it. Here are some of the most accepted ID proof documents for opening a bank account, and you can submit any one of these:
You need to provide two recent passport-sized photographs along with the above documents.
Finally, you also need to fill and review the account opening form. You can fill the form directly on the website of the bank or download it, fill it, and upload it again.
Based on the verification of documents, the bank will decide whether you are eligible for a Savings Account.
Aadhar Card + PAN Card + Video KYC
= Account opened!
Now that you know Savings Bank Account meaning, types, and benefits, go ahead and choose your preferred account. Whether you are a working individual, student, or a homemaker, it is essential to inculcate a healthy habit of saving for the rainy days. A Savings Account is the right place to begin to harness this habit. Once you start saving with discipline, you will see that your finances get more organised than ever.
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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.