What is meant by a Savings Bank Account?

Raju and Vinay are brothers, and both received Rs. 10,000 from their father as a Diwali gift. While Raju chose to buy a mobile phone for Rs. 10,000, Vinay got himself a mobile for Rs. 5,000 and deposited the remaining into a savings account, which he recently opened in a nationalized bank. Guess who would have surplus cash for next Diwali? Yes, it was Vinay, as the Rs.5000 deposited in the savings account helped him fetch interest and preserve the capital for the next Diwali. On the other hand, Vinay was empty-handed because of his overspending habits. This is an excellent example to showcase the significance of savings and saving accounts.

What is a Savings Account? 

This could be the first bank account for many, as a savings Account by definition lets you put your money securely with a bank without worrying about spending it or keeping it in your home. But not to worry, as you can withdraw the money from this account whenever required. Saving accounts are liquid investment products that enable you to save and also conduct transactions without any hassles from any place.

The interest rates offered by savings accounts are in the range of 3.5 to 6 percent per annum, depending on the invested amount and the bank. The savings account interest rate is not high compared to that of fixed deposits, but one can expect the same kind of safety for saving accounts.

Who can open a savings account?

Anyone who is an Indian citizen can open a Savings Account as an individual or jointly with another person by filling out an application form along with the necessary KYC documents. Even kids are eligible to open a savings account in banks and start saving money with or without their parents as co-applicant.

With technological advancements, it is now possible to open a savings account through the website of the respective banks. Gone are the days when you needed to physically visit a bank to open an account, provide numerous documents and wait for weeks for it to get activated. Nowadays, it is also easy to transfer money to concerned parties through the internet or mobile banking in a jiffy.

Why do you need a Savings Account? 

A Savings Account acts as a safe vault where you can store your surplus funds. But, unlike Fixed Deposits, it is possible to access this money at any time, without any penalties or restrictions.

It is possible to use your savings account to pay for services like electricity, gas, petrol, recharges for mobile phones, etc. You will also require a Savings Account to receive and make payments for your credit card bills, restaurants, supermarkets, shops, etc. In fact, a savings account helps you to safeguard your funds from theft or any other loss of misplacing since you are not required to carry all the cash wherever you go with fear.

Advantages of Savings accounts

Savings accounts provide many benefits for the holder, especially during the current times; it has become an indispensable instrument to save, pay, and transfer money. Here are some more advantages of the saving accounts:

• Digital Banking: In light of the recent push by the government to digital payments, the popularity of savings Account has increased dramatically. Savings accounts are a great option because you can use Internet banking such as the NEFT, RTGS, IMPS, UPI, and other electronic banking options to complete transactions. Similarly, internet banking and mobile apps have brought banking into the hands of the consumer.
• Useful for Government Schemes: A savings account is now essential to receive the benefits and subsidies directly credited to the beneficiaries. With the government’s intention to eliminate the middlemen and push for direct benefits transfer for its various programs, savings accounts have become necessary. Zero Balance Savings accounts are offered by many banks that don’t require you to maintain the minimum balance in the account.
• Cashless Transactions: You don’t need to visit anyone personally or carry cash always to pay someone. With a savings account and UPI-enabled apps, you can choose between paying the money directly to the beneficiary’s bank account or getting money deposited into your account. 
• Do Online Shopping: Online shopping has grown leaps and bounds in the past decade mainly because of the ease in making payments and getting the required product directly at your doorstep. When you have a savings account, you can shop for anything on the internet right from the comfort of your home or office, just by using a computer or smartphone to purchase items.
• Interest on Money Saved: The money that you may have in hand will not fetch any returns, but. If you deposit the same into a savings account, it will not only be secure but also helps you earn interest on the same. The rate of interest on the Savings Account differs based upon the bank, but the average rate of interest offered by most banks is 4% interest.

Latest Savings Account Interest Rates from Top Banks

Here is the table listing the interest rates of some of the top banks in India, which will help you understand the best bank to open a savings account.

As mentioned above, savings accounts are playing an essential role in the lives of today’s generation. With it, you don’t have to fear getting into debt, and it helps plan for your future requirements without any worries. Moreover, the interest rate offered by the bank, though minuscule, still serves as an ideal platform for kids to understand the need to open a bank account, the importance of savings, and the rewards that come with proper financial management.