What is a Savings Account? All You Need to Know

A bank account is essential for managing finances, enabling secure transactions, bill payments, and investments. Whether you are paying your bills, or making investments, you can use this account to fulfil all of your financial needs. It also safeguards your funds from theft, loss, or damage. Among the different types of accounts, a savings account is designed specifically to help individuals save money while earning interest.

This blog provides you with details on what is a savings account, interest rates, and the step-by-step process of opening one.

Savings Account Meaning

A savings account is a basic type of bank account that allows individuals to send and receive payments seamlessly. It stores individuals’ money and offers steady interest to them. It enables seamless transactions, making it easier to send and receive payments, manage finances, handle emergencies, and invest for the future.

Savings accounts are valued for their convenience, reliability, and security. Individuals can deposit funds in these accounts without any restrictions and withdraw whenever they need to.

Advantages of Using Savings Account

Listed below are the advantages of using a savings account:

• Receive a debit or ATM card for easy payments and cash withdrawals.
• Transfer money effortlessly using UPI, NEFT, IMPS, or RTGS through online and mobile banking.
• Most savings accounts allow unlimited deposits, offering flexibility for managing funds.
• The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures the deposits of up to ₹5 lakhs, ensuring financial safety.
• Enjoy interest rates ranging from 2.70% to 8.00%, credited monthly, quarterly, semi-annually, or annually, depending on the bank’s policy.
• Get special deals, cashback, and discounts on transactions made using your savings account and debit card.
• Easily deposit or issue cheques, making transactions smoother for personal and business use.

What are the Different Types of Savings Accounts?

Different types of savings accounts offer different features. Below are some common types of savings accounts you get in India:

• Regular Savings Account: A regular savings account allows individuals to earn a modest interest on their deposits. Some banks require account holders to maintain a minimum balance and charge an annual maintenance fee for accounts that fall below this threshold.
• Zero Balance Account: A Zero-Balance Savings Account is designed for individuals who want the flexibility to open a savings account without the burden of maintaining a minimum balance. This type of account allows users to save money without worrying about incurring penalties for low balances.
• Senior Citizens’ Savings Account: This category of savings account is for individuals over 60 years of age. A senior citizen savings account offers special privileges such as additional interest rate, lower interest on credit, and dedicated relationship manager, among others
• Women’s Savings Account: A women’s savings account is designed exclusively for women, offering various advantages, including special discounts on deals, unlimited ATM cash withdrawals and relaxation on maintaining minimum balance requirements.
• Kid’s Savings Account: This type of savings account helps children develop financial responsibility from an early age. Parents or guardians can open a kids’ savings account for minors under 18, providing them with a secure way to save and manage money. To open the account, identification proof and a declaration of guardianship are required.

Steps to Follow for Opening a Savings Account Online and Offline

Opening a savings account is a simple process. You can open it both online and offline after choosing your preferred bank.

Follow the below steps to open a savings account online:

• Step 1: Go to the website or download the mobile banking app of the bank.
• Step 2: Select the particular type of account you want to open.
• Step 3: Enter details like name, address, date of birth, PAN, and Aadhaar number.
• Step 4: Complete the video KYC by providing the necessary documents.
• Step 5: Your savings account will be operational after the successful verification of your documents.

You can also open a savings account offline with these simple steps:

• Step 1: Visit the bank’s branch that you want to choose.
• Step 2: Fill out the account opening form.
• Step 3: Attach the self-attested copies of your address and identity proof.
• Step 4: Deposit the minimum required amount based on the account type.
• Step 5: Your account will be opened and fully operational after the successful verification of documents.

Interest Rates Associated with Savings Accounts

The interest rates of banks’ savings accounts can change anytime. The change is based on inflation, monetary policy, and other factors. The below table shows the current interest rates of some popular public and private sector banks in India:

What are the Charges and Fees Associated with Savings Account?

Banks charge a maintenance fee for savings accounts from individuals. However, these fees can vary from bank to bank. Below are some common charges that are applicable to a savings account:

• Account Maintenance Charges: Banks charge a particular fee from customers to maintain their savings account every month.
• Charges for Non-Maintenance of Minimum Balance: Individuals need to pay a charge if they fail to maintain a minimum balance in their savings account.
• Transactional Charges: Individuals have to pay some transactional charges associated with a savings account if needed. These include fund transfer fees, ATM withdrawal fees, and even excessive transaction fees.

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