Savings Account Meaning & How it Works
08 Jul 2022
Table of Content
A savings account is one of the first financial products that most people have. This account has many uses and benefits for salaried and self-employed people. In this article, we will take a look at what is a savings account in a bit more detail. We will also explain the importance of saving account and how you can open this type of account. Let’s get started!
Savings account meaning
A savings account is a type of account in which you can park money that you wish to keep liquid for immediate expenses in the near future. You may also keep funds that you wish to spend at a later date or funds that you simply want at hand for any emergency. One of the main features of savings account is that you earn interest on the money you accumulate. While the interest paid is generally very nominal, it ensures that your liquid funds don’t lie stagnant.
Why have a savings account?
There are many advantages to having a savings account.
• Helps earn interest
As stated earlier, the money that you put into a savings account accumulates interest. Even though this interest is relatively lower than what you might earn from investing, it still helps by ensuring your liquid funds are not lying stagnant.
• Provides a means of financial planning
If we were to keep all our cash on hand with us, we would most likely end up spending it. Having a savings account means you can keep your money accessible for various financial goals without facing the risk of spending it.
• Permits easy transfer of funds
If you need to send money to anyone anywhere in the world, a savings account provides you with an easy means of doing so. You can simply use the NEFT, IMPS or UPI facility and transfer your money at a nominal cost. This way you can make important payments that you need to keep track of, such as your rent and utility bills.
• Keeps funds safe
One of the biggest benefits of a savings account is that it keeps your money safe. It would be rather risky to keep large sums of money at home with you. A savings account provides you with a safe place to store money that you don’t need to spend immediately.
• Helps make bill payments easy
You can link up your savings account to all your bills and EMI payments so that you don’t need to manually tend to your dues each month. Once you link the accounts, the money will directly get debited on the due date and ensure that you never default on payments just before you have forgotten.
• Additional benefits
Some banks also offer savings account holders additional benefits for holding these accounts. For instance, you may get a reduction in the fees of renting a locker or even get insurance coverage free of cost on opening certain types of savings accounts. Do make it a point to check on these benefits before selecting a savings account.
How to open a saving account?
Earlier, you needed to visit a bank in person to open a savings account. You would have to fill an account opening form and submit a few documents that verified your identity. While you can still open a savings account this way, the procedure has also gone online.
These days, you can complete the online saving account opening process from wherever you are – at home or even at work. Leading banks have kept their websites intuitive so that you are seamlessly guided through the process as you open an account.
You simply need to keep all the required documents handy and have a good internet connection. Most banks now perform the KYC verification process online through eKYC.
Documents required for opening a savings account
Here is a quick look at the documents that are generally required to open a savings account:
- PAN card or Form 60
- Officially valid documents such as Passport, driving license with photograph, voter’s ID card, NREGA job card duly signed by government official, or National Population Register letter with applicant’s name and address.
- Municipal tax receipt, utility bills (electricity, gas, etc.), or proof of accommodation given by employer (in relevant cases
It is possible that your official documentation may not have the exact address you are currently staying at. If so, you can provide any of these documents as proof of your existing address:
Do note that your bank may accept other documents too as proof of your address. It is important to check with them the exact paperwork that is accepted as per their procedure.
The documentation listed here is relevant for citizens residing in India. It may differ for NRIs (non-resident Indians), students of foreign origin, and others.
How to make the most of your savings account?
Your savings account is more than just an account where you keep your money. If managed well, it can turn into one of the best tools in hand for financial planning. To help you get started on the right track, here are a few tips on how to make the most of your savings account:
• Choose the right saving account
There are many different types of savings account options available with leading banks. It is important that you understand the features of each of these so that you select the right one. For instance, if you are a senior citizen, you can opt in for a senior citizen account that offers higher rates of interest and discounts that can help you save money in your golden years.
• Create a financial plan
Once you have chosen the right type of savings account, ensure that you create a savings plan. This way, you can determine how much money you need to put in without fail each month. You can also opt to have your salary credited directly to the account as this can help drive your savings goals.
You can opt in for various investment options like fixed deposits and recurring deposits to ensure that you earn more on your savings. These schemes will directly debit the money from your savings account each month.
Explore various types of savings account with Bank of Baroda
Bank of Baroda offers a range of savings accounts to cater to its customers’ unique needs. Take your pick from our different types of savings accounts including:
- Baroda Advantage Saving Account
- Salary and Pension Solutions for Indian Military Personnel
- Salary and Pension Solutions for Indian Central Forces Personnel
- Baroda Police Forces Salary Package
- Salary and Pension Solutions for Central/State Govt. Employees
- Baroda Salary Classic Account
- Baroda Super Salary Account
- Baroda Salary Premium Account
- Baroda Salary Privilege
- Baroda Champ Account
- Super Savings Account
- Baroda Jeevan Suraksha Saving Account
- Government Savings Account
- Baroda SB Self Help Group
- Baroda Mahila Shakti Saving Account
- Baroda Pensioners Savings Bank Account
- Baroda Platinum Saving Bank Account
- Baroda Senior Citizen Privilege Scheme
Each of these accounts offers unique features that truly make opening an account beneficial for you. For instance, the Baroda Salary Classic Account is an account that is specially created for entry-level employees and trainees earning under Rs 50,000 per month. With this account, you can get a complimentary zero balance account for your spouse, a free credit card, and enjoy a waiver in processing charges for retail loans.
Bank of Baroda also realizes the importance of saving money from a young age. For our young savers, we have the Baroda Champ Account which has been designed for minors between 0 to 18 years of age. This account comes with many features and benefits such as free DD for fee payments, no minimum balance requirement, and no charges for school fee payment.
Senior citizens can benefit immensely from the Baroda Senior Citizen Privilege Scheme. This account comes with higher rates of interest, 25% waiver on annual locker rental charges, sweep facility on request, and attractive discounts on locker rental charges.
The Salary and Pension Solutions for Indian Military Personnel is an account that is specially designed for military personnel who protect us with their bravery and courage. This account has many features such as personal accident insurance coverage, complete waiver in processing charges for loans, unlimited free transactions at any bank ATM, and lifetime free credit card, among other benefits.
To know more about each of the features of savings account types that we offer, get in touch with us today. You can walk into a Bank of Baroda branch that is close to you where our staff will help you select the right account as per your needs. You can also reach out to us on our toll free numbers at 1800 258 44 55 or 1800 102 44 55.
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