A savings account is a crucial financial instrument which allows an investor to earn interest while also having seamless liquidity and access. It has numerous benefits such as earning interest and safeguarding your funds.
With the advent of technology, online savings accounts have made managing your finances even more convenient. These accounts typically offer higher interest rates, providing a greater return on your savings, and can be accessed and managed seamlessly from your PC, laptop, or smartphone.
Let’s learn more about the benefits of savings accounts and how they can help you streamline your finances, achieve your goals, and secure your financial future.
What is Savings Account?
A savings account is a type of bank account that allows you to deposit, withdraw, and manage your funds easily while earning interest on your balance. You can also opt for opening a joint savings account with another account holder of your choice to enjoy the additional benefits of a joint bank account.
There are several kinds of savings accounts which include zero balance, salary, and regular. Some of them are designed specifically for minors, women and senior citizens.
What are the Features of Savings Account?
Here are some distinguishing features and advantages of opening a bank account:
- You can track transactions with a passbook and use a chequebook for easy payments.
- Banks provide ATM cards to all savings bank account holders.
- Set up automatic payments and deposits for convenience.
- You can withdraw funds anytime, with some limits on monthly withdrawals, though interest rates are typically lower.
- Pay your bills online easily through your savings account.
- You can receive email and SMS notifications for account activity.
- Savings bank account holders can opt for both mobile banking and internet banking as per their needs.
What are the Key Benefits of a Savings Account?
There are several key advantages of a savings account that make it a valuable financial tool:
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Convenient Transfer of Funds
The transferring process of funds from a savings account is quite simple. With mobile and internet banking, you can easily transfer money using RTGS, NEFT, IMPS, or UPI, making transactions fast and accessible.
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Auto Debits
Banks offer automatic debit facilities for utility bills and loan payments, ensuring timely transactions. When authorised, the bank deducts payments directly from your account, making bill management and loan repayments seamless and hassle-free.
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Safety of Funds
Keeping your funds in a savings bank account is always safe rather than keeping it in your hands. Another point to remember is that each savings account is insured by the Deposit Insurance and Credit Guarantee Corporation for up to ₹5 Lakh.
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Auto Sweep Facility
The majority of banks offer an auto sweep facility with savings accounts, which transfers excess funds automatically from your savings account to a fixed deposit once it reaches a specified balance. This allows you to earn higher interest rates on your funds while keeping them secure.
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Joint Accounts
A joint account offers greater flexibility, as multiple account holders can operate the account and sign cheques. It is ideal for managing household finances and budgeting, providing a convenient way for families to manage income and expenses.
Final Thoughts
A savings account is an essential financial tool for building emergency funds and achieving short-term financial goals. The benefits of savings account include security and easy access to your money. While there are various types of savings accounts with different features, they are essentially designed to provide the same core benefits.
These variations mainly offer slight differences in terms of interest rates or added perks, but all serve the fundamental purpose of safeguarding your funds and helping you manage your finances effectively.
If you are looking to start your savings journey, it is a good decision to start with a mutual fund as these offer better interest yield. Use Torus Digital Banking App and start investing today!
