Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Putting money aside can be hard when you’ve got daily wants and needs, but what are you going to do in a crisis or an emergency? Taking a loan, using a credit card or borrowing money from your friends should be a last resort. If you have a good emergency fund or savings, you can relax and write yourself out of any financial crisis.
Saving money is like a habit — it starts slow. Savings can help you pursue your dream, start a new career or business, and keep you afloat.
Not long ago, most of us interacted with a bank through a savings account, and we needed the approval of an existing account holder to open an account. Today, we have numerous possibilities, and opening a savings account is easier. After the Reserve Bank of India (RBI) deregulated the interest rates on savings accounts, banks and digital banks began to offer generous interest rates on deposits.
In short, you can do more with today’s savings accounts. What Is a Savings Account?
A savings account allows you to save your money.
You don’t have to hoard cash in your safe or locker with a savings account and it remains safe with the bank. It also falls under liquid investments–easy to withdraw whenever you need.
Although some saving accounts might have restrictions on when you can withdraw money, they are often flexible for goal-based savings. They serve as a good choice if you are planning to build an emergency fund, go on a dream vacation or want to buy a car or a gadget.
Today, you can also sign up for an online savings account. These accounts promise you high-interest rates and are faster than traditional saving accounts.
A savings account also helps you pay your bills and utilities and even make investments.
Overall, a savings account keeps your money safe and provides you with convenient ways to spend or grow that money.
And since these aren’t the ’90s anymore, anyone can open a savings account. Types of Savings Account
There are many types of savings accounts and each of them has a particular job to do and provides various benefits. Regular savings account: This is your regular one that provides you interest on your deposited amount. Although, there’s a withdrawal limit.
Salary account – This account doesn’t have a minimum balance requirement and will earn you no interest. It gets converted into a savings account if your salary doesn’t get credited for at least three months.
Women’s savings account: These are specifically made for women entrepreneurs that offer less interest on loans and have all the benefits of a normal savings account.
Children’s savings account – This is to encourage children to save, this account has a zero balance requirement and the same benefits as a normal savings account.
Savings account for senior citizens – Used by senior citizens to manage their pension and savings. It also comes with special benefits like high-interest rates for deposits.
How Does a Savings Account Work?
Banks primarily earn by lending money to people. The bank uses your savings account to lend money to others at a higher interest than what they offer you. However, you can also withdraw your money anytime you want. Let me show you how a savings account works: You sign up for a savings account.
You deposit money. The bank pays you interest as per their rate slab. The bank uses your deposit to fund loans to others. The bank charges a higher interest rate on loans. How to Open a Savings Account? Any Indian can open a savings account for themselves or jointly with someone else. You can visit the bank’s website or their branch to open an account, submit a few know-your- customer (KYC) documents and fill out the application form. That’s it.Even foreign nationals in India can get a savings account by following the above mentioned rules.You need the following documents to open a savings account: Identity proof – Aadhaar card, passport and voter ID. Address proof – Driver’s license, Aadhaar card and passport. A copy of your PAN card. Passport size photos. Benefits of Opening a Savings Account First, a savings account keeps your money safe in a secure banking system. Interest rates are more stable than other investment options like trading and mutual funds. […]
Protected by Patchstack