Savings Account

Every earning individual must have a savings account and a secure place to store hard-earned money. The primary purpose of a savings account is to provide a valuable medium for people to save money that they will not be using regularly.

What is a Savings Account

A savings account is an essential bank account into which you can deposit funds. You can withdraw funds from it; most banks will give you compound interest on the account balance. 

A savings account's objective is to provide a safe place to save money that isn't being used for monthly expenses.

Several banks, credit unions, and other financial institutions, in addition to other accounts, provide savings accounts. You may even find savings accounts with higher interest rates than others.

Types of Savings Accounts

In India, banks usually provide various types of Savings Accounts that can be opened to meet various investment needs. The types include-

  • Regular Savings Account

It is the simplest savings account that an individual can open. On such an account, the holder will tend to earn interest. The holder will be required to maintain a minimum balance in the regular savings account.

  • Instant Digital Savings Account

An Instant Digital Savings Account is usually opened through a mobile application or the official website. A mandatory KYC will be required to complete the account opening process.

  • Zero Balance or Basic Savings Bank Deposit Account

In a Zero Balance or Basic Savings Bank Deposit Account, the account holders are not required to maintain the minimum average monthly balance.

Such an account can be opened with no amount kept as a balance in the account. For it, banks levy some stipulations, for instance, no chequebook facility, a limitation on the number of withdrawals from the ATM, type of debit card available, etc.

  • Women’s Savings Account

A Women’s Savings Account is designed especially for women. Such accounts offer women many benefits, including preferential loans, discounts on lockers, unlimited ATM cash withdrawals, relaxed minimum balance requirements, etc.

  • Kids’ Savings Account

A Kids’ Savings Account can be opened by the parent/guardian in the name of children below 18. Such accounts can help children understand how banking works and learn at an early age. These savings accounts have regulated deposit and spending limits.

  • Senior Citizens’ Savings Account

A senior citizen savings account can be opened for those above 60. The accountholders can avail of many benefits on these accounts like low interest on credit, exciting interest rates on deposits, etc.

  • Family Savings Account

Individuals of a family can create many accounts under one family ID. For example, through a Family Savings Account, the members can benefit from opening FD, RD, savings accounts, etc.

  • Salary Account

A Salary Account is suitable for salaried accountholders who receive a salary monthly. Many benefits on such accounts can be availed, including free chequebooks, exciting interest rates on loans, insurance cover, zero balance accounts, etc.

Some of the Best Savings Account Interest Rate

Bank

Interest Rate

SBI Savings Account

2.70% p.a. approx

HDFC Bank Savings Account

3.00% - 3.50% p.a. approx

PNB Savings Account

2.70% - 2.90% p.a. approx

Axis Bank Savings Account

3.00% - 3.50% p.a. approx

BOB Savings Account

2.75% - 3.35% p.a. approx

ICICI Bank Savings Account

3% – 3.50% p.a. approx

YES Bank Savings Account

4.00% - 5.00% p.a. approx

IndusInd Bank Savings Account 

4.00% - 6.00% p.a. approx

How Does a Savings Account Work?

A savings account holds the characteristics that are mentioned below-

- Deposit or Withdraw Cash

Going to the bank to deposit or withdraw cash or using an ATM is a typical way to make deposits and withdrawals.

- Deposit Cheques

If your bank allows it, you can deposit checks straight into a savings account. Check deposits into savings accounts may also be possible through your bank's mobile app.

- Direct Deposit

If your employer pays you by direct deposit, you can have funds sent immediately into your account.

- Request a Cheque

In rare cases, you may want to have your bank issue a large cheque using funds from your savings account.

- Transfer from Checking to Savings (Internal)

If you have a checking account, you can transfer money from checking to savings in the same bank frequently and instantaneously.

- Electronic Transfers (Bank to Bank)

You can also make online deposits and withdrawals to and from another bank's savings account.

Open a Savings Account in India

The following are the steps detailing how to open a Savings Account offline-

Steps

Details

Step 1

Visit the bank with all of the relevant KYC documents. Bring both the originals and copies of your documents.

Step 2

When you arrive at the bank, proceed to the relevant counter and ask for the account opening form.


You must go through the entire form and fill it out completely. Be certain that all details are correct.

Step 3

Submit this form with copies of your documents.

Step 4

The bank officer will then submit your application for processing and verification.

Online Saving Account Opening Process

The procedure to open a savings account in India can be done through two methods-

a) Phone Banking

You can download the application of your preferred bank and apply through the application instantly.

b) Internet Banking

You can navigate to the official portal of the bank and sign up to open a savings account online.

Advantages of Savings Account

  • A savings account allows money to be deposited and withdrawn an unlimited number of times (may vary based on the type of account).
  • Personal accident insurance, lost card liability, health insurance, and other insurance benefits are available as add-ons.
  • Discounts and special offers based on the type of account and debit card provided.
  • Money can be transferred both online and offline.
  • ATM withdrawals are available throughout India.
  • It is possible to set up standing instructions for bill payments.
  • If the bank fails, the DICGC will insure the amount up to Rs. 5 lakh.

Interest Rate on Savings Account

On savings bank accounts, most banks offer interest rates starting at 2.5%. However, many banks offer higher interest rates of up to 7% if you keep a certain balance in your savings account.

Who Can Open a Savings Account?

Different banks' eligibility conditions for Savings Accounts may differ.

The following are the common criteria-

  • Indian people above the age of 18 can create a Savings Account both individually and jointly.
  • Minors can open a Savings Account with the help of their parents or guardians.
  • A Savings Account can be opened by a foreign national or a Hindu Undivided Family.

Documents Required to Open a Savings Account

  • Proof of Age and Identity - PAN Card, Voter ID, Passport, and Driving license
  • Proof of Address - Driving license, Voter's ID, Passport, Utility bill 
  • Photographs - Two passport-sized photographs
  • Senior Citizen Card - Document with proof of their age.

Ways to Maximize Your Earnings From a Savings Account

Here are some of the ways that can help to maximize your earnings from a Savings account-

a) High Rates of Interest

The best way to maximize your savings account returns is to open a savings account with a bank that offers higher interest rates. After all, a higher interest rate automatically results in higher returns.

Before choosing the right bank, compare savings rates online. Even a small savings account interest rate increase can result in you earning more interest on the money you have saved over time.

b) Taxes

Interest earned on Savings Accounts held by different banks is tax-free up to Rs 10,000 under Section 80TTA of the Income Tax Act of 1961 for those under the age of 60.

Similarly, if you are over the age of 60, you can claim a deduction of up to Rs 50,000 under Section 80 TTB of the Income Tax Act of 1961 on the interest earned not only on your Savings Account but also on your fixed deposits.

How much should you keep in the savings accounts?

  • Limits on the sum of money you can keep in a checking, savings, money market, or CD account can be imposed by banks and credit unions. These limits can be set per account or as a total for all of your accounts.

  • The limits may be higher, lower, or nonexistent, depending on your bank. If you're unsure whether your bank limits the sum of cash you can keep in your accounts, check your bank's website or customer agreement. You can also call the bank and enquire about deposit limits.
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