As a salaried or self-employed individual, you may need a secure financial option to store excess funds. This is where a savings account comes into play. A savings account will allows to store your money with a financial institution and access it as needed.
This will not only just keep your money secure but earn interest on the balance maintained. Though the returns are minimal, the key benefit is in the liquidity you enjoy.
Savings account allow you to liquidate your savings in the following ways:
Paying another account holder using a cheque
Withdrawing cash at an ATM
Making online and offline payments using your debit card
Approving bank transfers through NEFT/IMPS/RTGS
If you decide to open a savings account, you get to enjoy the following benefits:
It offers a great deal of liquidity, meaning you can withdraw your funds anytime.
The financial institution you choose takes responsibility for your money, and the money you deposit is safe and secure. Banks also insure the funds that you deposit in a savings account up to Rs. 5 Lakhs.
Most banks offer interest rates ranging from 3.5% to 6% on the account balance. This translates into additional earnings, over your other investments and income.
Account Holders can transfer funds easily to another party using different online methods like NEFT, RTGS, or IMPS.
They also come with a facility to open accounts in joint ownership with at most 3 parties. A joint savings account is ideal for managing your household income and savings.
A savings account also comes with different add-on facilities that you can avail of for greater benefits. For instance, the sweep-in facility allows you to convert additional funds into a fixed deposit and earn higher interest.
A savings account also makes it easy for you to pay your utility bills and investments. For instance, the automatic debit facility deducts the amount of bill payment or your SIP when it is due.
Here are details about the types of savings accounts you can choose from:
It is the simplest and most common type of savings account where you can store your funds to earn interest.
An instant savings account performs all the similar functions as a regular savings account. The only difference is that you can open this account online, almost instantly.
This type comes with exclusive offers for the account holders. These may include unlimited cash withdrawals, discounts on bank locker facilities, etc.
These accounts are specially designed to cater to the needs of women. These accounts also offer value-added benefits to the account holders.
Parents/guardians can open these accounts for their children and inculcate in them a habit of saving.
A family savings account is designed to help you manage household expenses and savings. Such an account can be jointly held by 3 members of a family.
As its name suggests, a salary account is where you receive your monthly income from the employer.
Zero balance savings accounts do not have any minimum balance requirement.
The eligibility criteria to apply for a savings account differs based on the bank that you choose.
Generally, in order to be eligible to apply for a savings account, you need to fulfil the following basic requirements:
The applicant must be a resident of India
The applicant must be at least 18 years of age
Parents/guardians can open a savings account in their child’s name
Identity Proof: Aadhar card, PAN card, Driver’s Licence, Passport, or Voter’s ID
Address Proof: Aadhar card, Driver’s Licence, Passport, or Voter’s ID
Income Proof: PAN Card or Form No. 60
Two photographs with a filled-out application form
The following table shows the interest rates offered by different banks on a savings account. Compare these rates to choose a financial entity that offers the most competitive interest rates:
Up to 6.00% p.a.
Jana Small Finance Bank
Up to 7.50% p.a.
State Bank of India
Up to 3.00% p.a.
Up to 3.50% p.a.
Up to 3.50% p.a.
Kotak Mahindra Bank
Up to 4.00% p.a.
Disclaimer: Interest rates mentioned are subject to change as per the issuer’s policies.
Savings accounts are financial instruments that allow you to park your excess funds with the bank. Storing your funds in a savings account helps you safeguard your money, while also helping you earn interest on the balance.
Yes, you can add up to 2 account holders with a joint savings account. Such accounts are ideal for managing household savings.
The interest rate offered by different banks on savings accounts varies. However, most banks offer a modest interest rate ranging between 2.50% p.a. - 7.50% p.a.
Banks charge joining fees, annual charges, and replacement charges on debit cards. These charges differ as per the bank you choose.