Savings Account derives its name from the term savings which is an important aspect for every individual’s life. There is a famous quote which states “Don’t save what is left after spending instead spend what is left after savings.” One rupee saved today could be worth a million tomorrow. Savings is usually confused with the term investment. Investment is a broader concept wherein the basic goal is to earn more money in the long term. Investment helps in doubling the amount currently available with you. But savings is done with the intention of safety and when needed the amount could be withdrawn easily. For saving money either a person can keep physical cash aside at home or deposit the amount in Bank accounts. As depositing money in savings account is safe than keeping cash at home people prefer opening savings account at any financial institutions or banks. In return banks provide interest for depositing the money.
What is Savings Account?
Savings Account are accounts which provides interest on money deposited in the account. These accounts are opened with banks or other financial institutions. These accounts are safe though the interest provided in the accounts are modest compared to other investments.
Need of Saving Account
- Safe method to save funds
Savings Account is one of the safest method of saving funds. One can easily withdraw and deposit cash. And the person need not be worried about theft.
- Digital services attached to accounts makes operation easy
Digital services are attached to the accounts. This means one can use ATM to withdraw cash without standing in long ques. Secondly the account holder can use internet banking to transfer funds and receive money. Also nowadays mobile banking and door step banking services have helped for very easy and smooth operation of accounts.
- Transfer of funds easy
Transfer of funds like internal transfers, NEFT, RTGS, gets easily done with the help of savings account. There are no limits on Cheque deposited or Cheque issued or payments made from the Savings Account.
- Government benefits can be availed
In order to avail the government schemes and receive subsidies it is essential to have savings account. Government is nowadays pushing people to avoid middlemen and enjoy the benefits directly through savings. Government asks to open zero balance savings account which is free from obligation to maintain an appropriate balance in the account.
- Interest on savings is a source of income
Cash Lying in home does not create any income whereas money kept in savings is not only safe but also provides interest which is also a source of income for many. Banks usually provide 4% to 6% interest rate on the deposits done in savings account.
- Can track spending
Helps to track receipts and payments done in the account. It helps in understanding the finance better.
- Liquid funds helps during emergency
Savings account keeps away from the debt and provides security to finances. It helps in taking instant loans and other forms of loans. There are facilities such as ATM Cards and Credit Cards attached to the account.
How to Open Savings Account In Banks
Any Indian can open savings account for themselves or jointly with someone else. One can do this by visiting a bank website or their branch. The account holder needs to fill KYC Forms and provide certain mandatory proofs such as
- Identity Proof such as Pan Card , passport or Voter ID
- Aadhar Card
- Passport Size Photographs
Can One keep too much money in Savings Account?
There are generally no rules for depositing amount in savings. But the when one deposits cash more than Rs 50000/- then pan number should be mentioned compulsory. If annual withdrawal or cash deposit limits in Savings Account Exceeds Rs 10 Lakh then banks are obliged to report the same to Income Tax Department. The above rule is also applicable for cash deposits or withdrawals for mutual funds, investment in shares, debentures, time deposits, credit card expenses, a transaction in immovable property, Purchase of foreign exchange linked to savings account.
Account maintained must comply with the rules set by the banks. Savings accounts needs to maintain minimum balances which are prescribed by the bank otherwise banks have the authority to penalize. Debit card and credit card attached to the account also have certain prescribed limits which the account holder must follow. Online transfer also differs person to person as per the risk category. Most savings account rules are prescribed by the Income Tax Department so that they can curb black money practices. As an account holder one must be aware about the savings account rules to stay away from the penalties of Income Tax Department.