What Is Savings Account?

Savings Account

Let us consider the story of the twin brothers. On their birthday, each of them was given Rs. 100 by their parents. While one of them kept the sum in his pocket and used it for occasional expenses, the other deposited the money in a bank, with simple interest at a rate of 10%. At the end of the year, while the brother who kept the money with him was out of money, the other one had Rs. 110 in his bank account.

This is a simple story to explain the concept of Saving Accounts and interest rates to children. But it is a perfect example that demonstrates the importance of a Savings Account, and how it can be beneficial to you.

What is a Savings Account?

This is the most basic type of account you can open at any bank. A Savings Account, by definition, allows you to deposit your money, safe with the bank, so you don’t have to carry it around with you or hide it in that rusted old steel safe at home. Don’t worry, you can withdraw these funds when you need them.

Savings Account are one of the most liquid investments, so it is easy to use them when needed for conducting transactions. This means that compared to regular investments, you can easily withdraw funds from your Savings Account, anywhere, anytime.

In fact, you can also use an online Savings Account to make the entire process, of operating your account, mobile. These online accounts are usually high-yield due to higher interest rates, and you can operate them over the internet, using your PC, laptop, or even your smart-phone.

Why do you need a Savings Account?

A Savings Account is a virtual vault that holds your money. However, unlike a Fixed Deposit, you can access this money whenever required. But that’s just a small aspect of why having a Savings Account is important.

You need a Savings Bank Account to make and receive payments, pay your credit bills, make investments, etc. You can use your account to pay for utilities such as electricity, and even mobile phone recharges. And, quite simply, you need a Savings Account to save your money, from theft, misplacement, and damage (calamities can strike anytime), because one can only store or carry a limited amount of cash without a constant feeling of apprehension.

Who can open a Savings Account?

Anybody can open a Savings Account. Any Indian national can open a Savings Account, either individually, or jointly with another Indian national, with an application form and the required KYC documents. In fact, even a Hindu Undivided Family is eligible to open a Savings Account. And while banks state Indian citizenship as a requirement for opening a Savings Bank Account, certain provisions have also been made for foreign nationals who stay in the country for a long term, due to business or other work, and need to make or receive payments; these individuals must simply provide the requisite KYC documents along with the application form.

Click here to open a Savings Account.

*The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.