One of the most important types of financial products that banks offer is a savings account. It allows people to deposit their money and keep it safe. These types of accounts are also liquid investments, which means that customers can withdraw money whenever they want.
Unlike other types of savings accounts, these accounts have some limitations when it comes to withdrawals. However, these accounts can offer exceptional flexibility, allowing people to set aside money for emergencies or short-term goals.
Factors to be considered before opening a savings account
Rate of interest
The interest rate that you get is a key factor that you should consider when it comes to investing your money. It can affect how much interest you will receive from your savings. A wise choice is to invest in a high-interest account that has a consistent variable rate.
Minimum cash balance to be maintained
Most banks have a minimal deposit that they require to open a savings account. Some lenders, on the other hand, will require you to maintain a certain minimum balance to maintain a successful relationship with them.
Withdrawal limits
One of the most important factors that you should consider when it comes to choosing a savings account is the availability of regular withdrawals. Many banks have monthly restrictions on the amount that you can withdraw from your account.
Service charges
It is also important to consider the various fees that you will be charged to maintain a successful relationship with the bank. Some of these include the monthly fees, cross-currency fees, and the PIN regeneration fee. Having a good understanding of these fees will allow you to make informed decisions when it comes to investing your money.
Customer support
One of the most important factors that you should consider when it comes to choosing a savings account is the availability of exceptional customer service. This is because, if you encounter a problem with the bank, you should contact its customer service department immediately. Having a good relationship with a bank is very important to ensure that they provide exceptional service.
Types of savings account
- A regular savings account is a great way to enjoy various benefits. It can also provide you with a secure and convenient environment. A standard savings account is different from other types of accounts as it does not have a regular deposit. Instead, it allows you to keep money in a secure environment.
- Salary account: Banks commonly use these accounts to provide a platform for companies to pay their employees. They offer attractive terms and rates on these types of accounts. When the time comes to pay the employee’s salary, the bank collects and distributes the money from the company’s account.
- Savings account for senior citizens: these types of accounts are also known to have higher interest rates and banking privileges. They can be linked to other savings accounts for senior citizens. These accounts will allow you to transfer your money from your retirement accounts and pension funds to a single bank account.
- Account for minors/ children: These accounts do not have a minimum requirement. A minor’s savings account is designed to educate children about the various advantages of banking. It can be opened and operated by the child’s legal guardian. After reaching 18, the child can start managing the account independently. Once they turn 18, the account will be converted to a regular one.
- Zero balance account: This type of account is commonly used by banks to provide a combination of a current account and a savings account. Although there are limits on the amount of money that can be withdrawn, you will not be charged for the withdrawal.
- Account for women: These accounts come with various features that can benefit the account holder. Some of these include lower interest rates on loans and certain purchases and a waiver on Demat account charges.
Benefits of a savings account:
A savings account is a convenient way to store your money. The interest on the balance can range from 3.5% to 7%. It’s easy to open and maintain a savings account with various features and online banking. Banks also provide discounts on locker rental facilities for those with a minimum quarterly balance.
Besides regular savings accounts, banks also provide various insurance policies for their customers. Some of these include death and personal accidents. You can use your debit card at any ATM in India.
Eligibility and documents required:
Different banks have their eligibility criteria for opening a savings account. The common ones are that both Indian residents and foreign nationals can open it. Undivided families and foreign nationals can also open savings accounts. Minors can also join the family.
Before opening a savings account, a person should provide proof of their identity and age, such as a PAN or a driving license. Besides this, they should also show at least two passport-sized photos. A senior citizen card is the most preferred proof of their age.