1. The base for carrying financial transactionsA savings account can be used to send and receive payments and it serves as a base for all transactions. Every transaction in a saving account can be done either by net banking, debit card, cheque or withdrawal slip. Financial transactions can also be carried out swiftly by using NEFT/RTGS/IMPS facilities.
2. Nominal interest ratesSavings accounts offer a nominal interest rate ranging from 3 to 7 per cent. Interest in this account is calculated on a half-yearly basis by most banks. The interest rates of most savings accounts are determined by the Reserve Bank’s decision on repo and reverse repo rates. However, keep in mind that the interest from your account if exceeds Rs.10, 000 in a financial year is subjected to taxation.
3. Minimum average balanceYou need to maintain a minimum average balance in your savings account, failing which subjects you to a penalty. The minimum average balance differs across banks and so does the penalty. However, the requirement is more for accounts held in a private bank than public one.
4. Passbook and cheque facilityAlmost all savings account offer this facility. When you open a savings account, you get a passbook and cheque carrying your account details. While the passbook lists your transactions, you can withdraw money using cheque. You can also issue a cheque to someone in case required. Also, most savings accounts offer debit card facility.
5. Additional benefitsMany banks offer additional benefits along with their saving account. Some banks allow you to open a Demat Account along with savings accounts for free, which can be used for trading in the stock market. Also, some banks may offer you a free-locker facility when you open a savings account with them.
6. Accessible for all age groupsA savings account can be opened by persons belonging to all age groups including minors, provided they have the required documents and complete the KYC procedures. As per the RBI mandate, a minor above 10 can operate a savings account independently, if desired.
A savings account is the simplest way of saving money and carrying out regular expenditures. Most people use savings accounts as a base to meet their liquid investments outside of other demand accounts and cash. It also makes access to funds easier.
Learn more about Mutual Funds here.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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