Benefits of Savings Accounts

Last Updated : Aug. 19, 2020, 5:14 p.m.

Savings Account is one of those banking products with which a large portion of our population is familiar. If we were to put this fact in numbers; more than 80% of our population has one or more than one savings accounts in their names. So what is the basic function of a Savings Account because of which so many people use this product? Well, the basic function of a Savings account is to keep your hard-earned money safe and also provide interest on the same. Savings Account helps people in developing the habit of saving money from an early age itself and several banks provide different kinds of savings accounts to all types of individuals.

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With the different types of Savings accounts , individuals can choose the suitable one according to their convenience. Apart from its basic features, Savings Accounts also offer several benefits such as safety of money, liquidity, bill payment features, lower interest on loan facilities, etc. We will be covering some of the benefits of the Savings Account in this article so that you can understand the reason behind its popularity. So, without any further delay, let’s get to it.

What can you Get with a Savings Account?

As we said, savings accounts come with several benefits provided by the banks to help the account holders. With these benefits, customers can make the most out of their savings accounts. A savings account often happens to be the first banking product that customers interact with during their lives. We are showing some of the prominent benefits of a Savings Account in detail. Please have a look.

Income Generation through Interest

The Savings Account interest rates change from one bank to another and usually range from 2.25% to 4% per annum on an average. The balance earned on the amount deposited on the Savings Accounts helps improve an individual’s overall income in the long run. Moreover, some banks also offer higher interest rates on maintaining a higher balance in savings accounts.

When choosing a Savings Account, customers look for higher interest rates. This is why we are showing Savings Bank Account Interest Rates of the top banks in India . You can choose the most suitable one for you. Do check them.

Earn Higher Interest with Sweep-in Facility

Customers who want to earn higher interest rates than the savings account can enjoy the Sweep-in facility. This is one of the salient benefits of the Savings Account with which an individual can earn Fixed Deposit interest rates on their money in saving accounts. You must be thinking how? Well, with the Sweep-in facility, any amount in your savings account above the threshold limit will automatically transfer to your Fixed Deposit account for a Fixed Tenure and will get returns on that particular amount.

Let’s break it down simply. Suppose you have INR 50,000 in your Savings Account. Now, if you have opted for a Sweep-in facility with the threshold limit of INR 25,000, the remaining amount (INR 25,000) will be transferred to your FD account. Also, at any time, if you need these funds urgently, the FD account will fulfill that need (Sweep-out facility). The rate of interest tends to change from one bank to another basis the FD interest rates. The most exciting thing about this benefit is that it provides liquidity and flexibility to customers, that too with higher interest rates.

Several banks provide a Sweep-in facility on their savings bank accounts. Some of these schemes are SBI MODS Account, HDFC Bank Sweep-in deposit Facility, Bank of Baroda Super Savings Account, ICICI Bank Money Multiplier Plan, Kotak Mahindra Bank Sweep-in facility, etc. Customers can opt for this facility via Internet Banking or by visiting their respective bank branches.

Liquidity

When we talk about the Savings Account, the primary aim of this account is to develop a habit of savings in people. A large portion of our population uses a Savings Account to save money for emergency purposes. But the best thing about a Savings Account is the liquidity it provides to customers. When we say liquidity, it means individuals are free to withdraw their money at any time without paying any charges for this. You will always have the accessibility of the funds in your savings account.

Debit Card Benefits

With the Savings Account, banks provide ATM-cum Debit Cards to the customers. The type of debit card will depend on the bank and the type of the Savings Account. This Debit card is not only a piece of plastic in your pocket; it is a gateway to several services. With your Debit Card, you can withdraw money from ATMs (Both Domestic and International), send and receive money to other people, Shopping (Both Online and Offline), Mobile Recharge, Bill payments, etc. There are so many things that a customer can do with his or her Debit Card.

Some banks provide a Debit card free of cost, while some banks charge a fixed annual fee from customers that differ from one bank to another. The most exciting thing about a Debit Card is that customers can get some exclusive rewards and cashback on shopping with their debit card at several online platforms and offline merchants. Customers get reward points on each of their debit card transactions. These points can be redeemed to get a range of other offers according to your convenience.

Zero Balance Feature

Several Banks offer Savings Accounts with which customers don’t need to worry about maintaining an average monthly or quarterly balance. With the Zero Balance Savings Account , banks don’t charge any fee if a customer is not maintaining the average monthly or quarterly balance. This is an added benefit for those customers who usually think twice before opening a savings account because of the minimum balance requirement. Some of the top banks that offer Zero Balance Savings Accounts are State Bank of India (SB), Kotak Mahindra Bank, HDFC Bank, ICICI Bank, Bank of Baroda, etc.

Special Facilities for Minors and Women

Some people think that only people above 18 years of age can open a Savings Account, which is not true. Several Banks provide exclusive Savings Account for Minors with which people can make their children learn the importance of money management from an early age. With this benefit, a child can understand the functioning of a Savings Account that will help him or her in the future. Children above 10 years of age can handle their accounts by themselves while below this age, the account will be operated jointly with a parent or guardian. Apart from this, banks also provide exclusive Savings accounts to women who are equally matching the footsteps of men in current times.

Some of the top Savings accounts for Minors are SBI Pehla Kadam, SBI Pehli Udaan, HDFC Bank Kids Advantage, ICICI Bank Young Stars Account, BOB Kids Account, Axis Bank Future Stars Savings Account, etc. On the other hand, some of the top savings accounts for women are Kotak Mahindra Bank Silk Account, Axis Bank Women’s savings account, IDBI Bank Super Shakti, etc.

Pre-approved Loans at Lower Interest Rates

Banks also offer pre-approved loans to select Savings Account holders who have an overall good profile. Also, existing customers can get lower interest rates and reduced processing fees on different types of loans such as personal loans, Home Loans, Vehicle Loans, etc. This is an extraordinary benefit for those Savings Account holders who need funds urgently.

Additional Benefits

Banks provide benefits like Passbook facility, Cheque Book facility, Internet Banking facility, Mobile Banking facility, SMS-alert facility to its customers on their Savings Account free of cost. With the passbook facility, customers can keep track of their banking transactions and even use it as the Address proof on various occasions. Customers also get a cheque book with a fixed number of leaves (vary from one bank to another). A cheque can be used for different purposes such as transfer money, bill payments, etc.

With the Internet and Mobile Banking facility, you can do several different things such as Recharges, Bill Payments, Money Transfer (NEFT/RTGS/IMPS), Passbook Details, etc.

But nowadays, to add some extra values to the Savings Account, banks have started to provide Basic Accidental Insurance, Medical insurance, Foreign Travel Insurance, and other different types of Insurance covers to customers. The insurance limit on these plans may vary from one bank to another bank. So, when you are choosing the right savings account for yourself, you should see which bank is providing that extra value to your account.

Other than these added ones, the most important benefit a Savings Account provides is the Safety of your money. Once you deposit money into your Savings Account, you don’t need to worry about it anymore. The bank will keep it safe.