Features & Benefits of Savings Account

17 Oct 2022

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Savings account is the most basic bank account available. It is an account that allows you to pool in your finances and manage them. The funds are available to be withdrawn at any time. With the different needs and requirements of the customers, banks have begun offering different types of savings accounts to meet these different needs.

Features of Savings Account:

  • A savings account comes with a passbook and cheque book feature
  • You can receive payments and make payments from your savings accounts
  • Auto debits and auto credits can be set up from your savings accounts
  • Savings bank account holders can access internet banking and  mobile banking for their needs
  • Banks offer ATM cum debit cards to savings bank account holders
  • A savings bank account earns low interest rate but allows the customer the freedom to withdraw funds at any time subject to a limit on monthly withdrawals.
  • It is possible to pay bills from your savings account
  • Banks also send transaction alerts to their customers via SMSand email as a part of SMS banking services 

What are the Benefits of Savings Account?

While a savings account has a lot of utility, it only earns interest at 3.5% to 6% per annum. In such a case, are there any benefits of having a savings account? The answer is yes. There are many benefits of opening a savings account. Let us consider them. Here are the benefits of having a savings account:

• Liquidity

One of the benefits of opening a savings account is that it offers you liquidity.

• Safety of Funds

A savings bank account is a safe avenue to keep your funds rather than keeping it on hand where it is susceptible to get lost or stolen. Another important point to remember is that each account is insured by the Deposit Insurance and Credit Guarantee Corporation for up to Rs. 1 lakh.

• Additional Earnings Because of Auto Sweep Facility

Most banks have an auto sweep facility where funds above a particular limit are automatically converted into a fixed deposit. These funds earn interest at fixed deposit rates as compared to regular savings rate. By enabling this feature, the depositor can get full benefits of keeping money in a savings account.

• Automatic Debits for Payments

Banks allow customers to set up automatic debits for utility payments and bills. In such cases, the utility company or telecom company raises a demand with the bank and the bank automatically debits the bank account. This is a convenient way to make payments on time. When you take a loan, you can set up an auto debit facility from your savings account where the instalment will get debited from the savings bank account.

• Auto Credits for Investment Incomes

One of the benefits of keeping money in a savings account is that it can be linked to a demat account and other investments. In such cases, the income from dividends and interest gets automatically credited to the bank account. This convenience ensures all incomes get pooled in one account.

• Convenient Fund Transfers

It is extremely simple to make fund transfers from a savings account. There are different modes of a fund transfer which are easily available in both internet banking and mobile banking. A savings bank account holder can transfer funds using NEFT, RTGS, IMPS and UPI.

• Joint Accounts

There are benefits of a joint savings account. Having a joint account provides greater flexibility since all the joint holders can sign cheques and operate the bank account. It makes it easy to track spends and incomes. A joint account can be maintained for household incomes and expenses which is excellent for financial planning.

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Different Types of Savings Account

Savings give financial security and relieve stress. They are fundamental for a secure financial future. It is the fund that bails you out through rough times like the Pandemic. If it hadn't been for those wisely guarded pennies, people who went through layoffs or salary reductions could not have survived. Without their savings to fall back on, things would have been difficult. Saving account interest rates may have dropped but they still add 2.75 -3.35 % (subject to change) per year to your deposit. So, while we realise it is healthy to save, you should know the types of savings account that will best serve your purpose and be beneficial for your small, medium or large saving behaviour. Here’s a quick checklist that will help you to make a more informed decision.

How To Open A Savings Account

A savings account is perhaps the first interaction a person has with a bank. It is the most basic of bank accounts. It offers the safety that a depositor looks for, plus interest rates and the flexibility of withdrawing money anytime and anywhere.

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