One of the most common kinds of bank accounts owned by individuals is a savings bank account. You will keep the money secure when earning money as interest on your savings account. You are paid by the bank to allow your money to be kept. The pace is typically marginally higher than the inflation rate. You can also make cash deposits and withdrawals with a savings account. Your chequebook facility. It is one of the best ways of running your cash by parking it securely on the bank account. The maximum number of withdrawals and the maximum amount that can be withdrawn within a set time are such limitations.
BENEFITS OF SAVINGS ACCOUNTS
Here are some of the main features of a regular savings account:
- Interest income: Accounts of savings pay returns on the money deposited on the account. Present accounts, however, are not worthwhile. The RBI previously permitted banks to pay just 4% p.a. at a fixed interest rate. On day-to-day savings accounts balance. In 2011, however, the RBI deregulated the savings banks’ interest rates. Each bank is therefore free to set its own rate (within the framework of certain RBI rules).
- Flexibility: Another feature of savings accounts is the flexible management of cash withdrawals or deposits by the account holders. Whenever you wish, you can put in or collect money. This is separate from other deposits, such as a permanent deposit or a repeat deposit account. For instance, a Fixed Deposit (FD) account doesn’t have a simple savings bank account liquidity. You may be asked to pay a penalty to break your deposit and make an early withdrawal if you desperately need money. Your money is locked for the tenure of your investment in a fixed deposit, or a recurrent deposit account (RD) so that you can make withdrawals only on payment of a penalty before your due date. Similarly, you cannot make a partial withdrawal of your money from an RD. You would need to close the account completely and withdraw the entire amount. A savings bank account poses none of those problems.
- Tax Benefit: In a savings account you also earn some tax gain for holding money. Interest income from savings accounts up to Rs. 40,000 a year is tax-free.
TYPES OF SAVINGS ACCOUNT
Each bank offers various types of savings bank account schemes to suit the needs of different customers. You can pick the one you need to park your money safely. Then there are retirement accounts of various kinds.
ELIGIBILITY TO OPEN A SAVINGS BANK ACCOUNT
Any person over the age of 18 can open a savings account. In general, the following individuals are eligible to open a regular savings account in India:
- Resident Individuals above 18 years (sole or joint).
- Hindu Undivided Family (HUF).
- Resident foreign nationals (with the requisite documentation).
- Savings account for senior citizens: You need to be above 60 years of age.
- Savings account for children: Need to be below 18 years of age, and have a guardian/parent.
- Savings account for women: Applicants need to be women above 18 years of age.
- Savings accounts for high net worth individuals: Applicants will need to maintain a high minimum Average Monthly Balance (AMB).
