Everything you need to know before opening a savings account
A savings account is directly or indirectly needed to perform almost all the vital financial transactions in India. You will need a savings account for the following reasons:
- Investing in financial instruments like fixed deposits, mutual funds, etc.
- Sending and receiving a demand draft or accounts payee cheque
- Maintaining a locker in a bank
Check this post to know more about these accounts and why you should consider opening one.
What is a savings account?
A savings account is a modern alternative to a traditional vault to safely store your money. You can also earn interest on the money kept in such accounts. Unlike fixed deposits, where the money is locked in for a certain period, savings accounts allow you to withdraw money at any time through cheque, ATM, or online banking.
Types of savings account
Banks can offer many types of savings accounts depending upon your need and requirement. Following are some popular types of savings accounts that you should be aware of.
- Classic savings account
It is the most basic type of savings account that can be used for common banking operations such as deposits and withdrawals. Generally, you are required to maintain a minimum balance in such accounts.
- Salary account
As the name suggests, you can receive your salary in such accounts. A basic salary account can come with zero minimum balance requirement and an SMS alert facility.
- Senior citizens savings account
Such accounts are specifically designed for senior citizens with facilities like medical consultations, health check-up vouchers, etc.
- Savings account for a minor
These accounts can be opened for kids below the age of 18 years.
- Women’s saving account
Women’s savings accounts specifically cater to the banking needs of modern women. Such accounts can offer facilities like discounts on locker rentals, cashback and higher withdrawal limits on debit cards, etc.
- Digital bank account
These new age savings accounts are accessed and operated from the convenience of an app. You don’t have to visit the bank branch to open an account. You can just download the banking app and follow the in-app instructions to open a digital account and use it for banking transactions.
The eligibility criteria to open a savings account
The following persons or entities can open a savings account in India:
- A resident Indian
- Hindu undivided family
- Foreign national residing in India
There can be some additional eligibility criteria depending upon the types of savings accounts.
What is the procedure to open a savings account?
You can open a savings account through the following two methods:
- Traditional Method
- Visit any bank branch.
- Fill up the account opening form.
- Submit the filled up account opening form along with KYC documents such as photocopies of Aadhaar card, PAN card, address proof, etc.
- Your account will be opened in the next few days after due verification by the bank.
- Online Method
- Visit the bank’s website.
- Apply for a savings account online through the designated portal.
- Follow the instructions
It is recommended to open a savings account online as the complete account opening process is faster and hassle-free when compared with traditional banking.
Why should you have a savings account?
- You can use a savings account as an anchor for managing all your accounts and investments.
- There is no risk of losing your money. The DICGC (Deposit Insurance and Credit Guarantee Corporation), a wholly owned subsidiary of RBI, insures the amount kept by a depositor in a bank. The insured amount can be up to a maximum of Rs 5,00,000 for each depositor in a bank.
- Savings accounts generally come with ATM cards for easy withdrawal of money and online shopping.
Savings accounts are a gateway to banking services. Furthermore, they can also help you have a holistic view of your finances and transactions so that you can plan your finances accordingly.