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What is a savings account? How do savings accounts work? How does it benefit people?

We often think of earning money and spending as the two main functions of money. But the real fun begins when we learn to save our hard-earned money. And, the best, most reliable, and secure way to save and grow this money are to open your own bank account and keep the money there. What is a savings account? How do savings accounts work? How does it benefit people?

Today, in this article we will discuss, what is meant by a savings account, what it takes to open this account, its functions, and its benefits.

What is a savings account?

For many of us, having a savings account is just an alternative to setting up our own checking account at the bank of our choice.

However, these savings accounts are primarily used for the purpose of saving our money. Where a checking account is only used by us for the purpose of monthly expenses and daily transactions. And, any savings account is a perfect way to save our emergency funds.

Also, most people have two types of accounts at the same bank; So you can easily make money transactions through these two accounts.

The description of an account is as follows:

The most basic account is a savings account. Which you can open in any bank in India or in the world. By definition, a savings account allows you to securely deposit your money in a bank. You will never have to carry that accumulated money unprotected. Or, you don’t even need to store it unsafely in your home. This account allows you to withdraw your savings whenever you want.

This savings account is one of the liquid investment methods. Therefore, these types of accounts can be easily used to manage any type of transaction That is, it is easier to withdraw money from your savings account anywhere and anytime than with regular investments. You can withdraw money from your savings account only a certain number of times a year.

 

However, in many cases, these savings accounts of the bank also offer some exceptional flexibility. Thus, it will be easy for you to make withdrawals from your emergency fund. You aim for the short term; Expenses such as buying a car, buying cosmetics, or going for a walk can be covered from this type of account. Or, you can use it comfortably just to save surplus cash.

 

Online Savings Account:

In today’s internet-dependent digital age you can open and use an online savings account. So, you can manage your account from anywhere using your mobile, computer, and laptop. Typically, these online accounts offer high-interest rates.

How do savings accounts benefit me?

A savings account of any bank has some common benefits. And, every bank is interested in helping us to open this savings account. As an account holder, you can choose from a variety of savings accounts of your choice to get the most out of your savings, which will give you the best features.

Top 10 Savings Account Benefits:

So let me know about the benefits of a savings account –

1. Protecting Your Money:

Having a savings account in the bank means that the entire responsibility of protecting your money is in the hands of the bank. Having a large amount of money with you means fear of theft, risk of loss of life, risk of loss or loss of money due to a catastrophic disaster. A savings account is your place of trust to avoid these dangerous situations.

2. Easy loan arrangements:

Having a savings account in your name in any bank means that you are trustworthy to the bank. When a fair amount of money falls into your account each month, the bank considers you reliable enough to increase your credit. If the bank sees that your monthly income can cover your credit or EMI, then you can easily get a loan from a bank or credit card.

3. Consistent interest rates:

A savings account pays a fixed amount of interest over a period of time on your savings. Many banks offer slightly higher interest rates than inflation. However, this is seen as a way to let your money grow over time. However, the real advantage of paying interest, in this case, is that your cash protection is always maintained.

4. Easy money management:

A savings account helps you manage money easily. You can make money transactions directly from this type of account. Alternatively, you can transfer funds from one account to another. Moreover, you can easily get your money through ATM services.

5. Provide instant payment services:

Using a debit card you can immediately pay for your purchase. By linking your debit card to an e-wallet or UPI service, you can transfer money from your savings account to anyone else’s account. However, if you do not have a savings account but do not have a debit card. And no instant payments can be made without a debit card.

You can withdraw money from any country’s ATM for free with the international debit card of some bank’s savings account.

6. Automatic bill payment:

Paying bills is an important part of adult life. You can leave the responsibility of the tedious process of paying the bills in the hands of the bank. You can easily pay bills automatically using the debit card associated with your savings account. All you have to do is instruct your bank to pay your bills automatically.

7. Free withdrawal facility:

The main purpose of a savings account is to encourage savings. In case of emergency, you will also get the benefit of withdrawing your money from this savings account. Instead of a fixed deposit, your money is not held here for a fixed period of time; So you can withdraw money whenever you want.

8. Tracking Money Transactions Online:

Anyone can keep track of their money transactions online with the help of net banking or mobile application.

9. Maintaining Financial Discipline:

Having money at hand creates an unreasonable urge to spend money. So, if you keep money in a savings account, you don’t have money in front of your eyes, but you can use that money exactly when you need it. So, you can easily reduce waste and save money properly.

10. Helping to pay income tax:

Since your income is credited to the savings account, it is easy to keep track of your total annual income from there.

What is financing?

Moreover, when you file your income tax, you can easily download your account statement for proof of income.

What does it take to open a savings account?

As such, a savings account is one of the least risky and straightforward and best ways to save money for your future. Therefore, customers of any savings account have the right to receive interest earned annually on their savings. At the time of opening this savings account, customers have to submit their KYC (Know Your Customer) documents, address, and proof of identity to the bank for verification.

Once the bank has verified these documents, a customer is able to open his savings account. Documents required to open a Savings Bank Account –

1. Certificate of the identity of the person:

Note below that copies of any document, which properly carries the identity of the customer, should be submitted to the bank for verification.

All of these documents must be approve by the government –

  • Aadhaar card
  • Passport
  • PAN card
  • Voter ID card
  • Driving license
  • Employee ID
  • Bank passbook
  • Ration card

2. Certificate of Personal Address:

Note below that the government-approved documents have to be submitted to the bank so that the address of the customer can be verified.

It doesn’t matter which one you submit – any of them will suffice.

  • Voter ID card
  • Passport
  • Ration card
  • Letter from a recognized government authority (Gazetted Officer) to verify the address of the customer’s residence
  • Bank passbook or bank account statement
  • Utility bills in the last 2 months (eg electricity, water, telephone, and gas)
  • LIC Policy / Receipt

Also, when filling up the Savings Account form provided by the bank, the customer is required to submit two color passport size photographs.

After submitting these documents, the bank verifies them and then the customer will decide whether it is suitable to open a Savings Bank account in their institution.

Our last word

This is the end of today’s article about what a savings account is and its benefits of a savings account. Hopefully, you have fully understood Savings Account (About savings accounts in Bengali). To share the article on social media, you must really like our article today. Also, if you have any questions or suggestions related to the article, be sure to comment.

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