Savings Account Explained Through FAQs

by Giselle Lobo Writer & Blogger

What do you do with the money that is left after paying your monthly expenses? Do you invest them in mutual funds, stock market, retirement funds, fixed deposits, etc.? Does this leave you with limited liquid cash? Withdrawing funds from investments is not easy. There are deductions and penalties involved. You can borrow funds through credit cards, but then those come with interest rates.

So, how do you think you will arrange money during emergencies? The answer is a savings account. These accounts are basic and readily provide access to cash. Although they offer lower interest rates on balance maintained, you need a savings account. Let us see how it is an attractive product.

What is a savings account?

It is a deposit held with the bank which offers principal security for a moderate interest rate and immense liquidity. They are ideal for holding emergency funds, which you might require for fulfilling your short-term goals.

Who offers a savings account?

All the banks in India offer savings account. You can savings account opening online or offline now. The only medium enables you to compare interest rates, minimum balance requirement, and other offers. Once you make the right choice, fill the online form, and submit them with relevant ID proofs and other documents.

What are the different types of savings account?

Besides the standard savings account, banks in India offer other types of accounts as well:

Joint account
Women account
Senior citizen account
Minor account
Salary account

Are there any restrictions on the age and income for opening a savings account?

There are no such restrictions imposed by banks while opening the account. However, there might be different minimum balance requirement needed from your end bank to bank.

What charges get levied if the minimum balance requirement is not met?

According to RBI guidelines, banks cannot penalise you for maintaining a minimum balance in the dormant account. Accounts that are operational and do not meet the desired limit, then the bank is liable to charge a non-maintenance fee besides the Service Tax and Education Cess at applicable rates.

Is there is a difference between private and public savings account?

Considering the operations, the services offered by private and public savings account are the same. However, they differ in other areas, like the minimum balance requirement is higher under private banks than public ones. Meanwhile, the free charge benefit offered by public banks is greater than private banks.

What are the interest rates on a savings account?

The interest rates on savings account are generally between 4% to 7%.

When does the interest rate get credited to my savings account?

The interest rates either get deposited or credited half-yearly. The interests, however, gets calculated either monthly or daily.