A savings account is a bank account that benefits employees with regular monthly income. A savings account is insured up to Rs. 1 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC), Ministry of Finance. Besides a bank, you can also open a savings account with the Post Office. A post office savings account attracts better interest rates than bank savings accounts. Sometimes not all banks have branches in remote areas of the country, but the post office has better reach in remote areas.
The basic difference between a checking account and a savings account is that the latter will offer you interest on deposits. The reason why a savings account offers such a low level of interest is that your money will be kept safe there unless it is withdrawn or deposited. Savings accounts offer interest rates ranging from 2.70% PA to 5.25% PA, depending on the amount of the net balance and this will vary by bank and post office.
Table of interest rates of some major banks
|Bank||Interest rate (PA)|
|National Bank of Punjab (PNB)||3.00%|
|Bank of India||2.90%|
|Kotak Mahindra Bank||3.50%|
Compared to these rates, the Post office savings account offer 4% PA. Therefore, the interest rate on a savings account is better than that of other public or private banks. Thus, if you wish to open a savings account, you can consult the offers offered by La Poste. The account will earn you the same benefits, but with a better interest rate. Only a minimum balance of Rs. 500 will be required for opening the account.
Types of savings accounts
Savings accounts can be of several types such as ordinary savings account, salary-based savings account, savings accounts for the elderly, savings accounts for minors, zero balance savings account, the savings account for women. At present, the net banking option of savings accounts is an added advantage, you do not need to physically go to the bank to open the account or carry out transactions. The minimum maintenance balance of a savings account is lower than that of current accounts. You can pay your credit card bills directly or transfer funds from your savings account.
A savings account also keeps track of the account holder’s income statements. The liquidity of a savings account is very easy but the withdrawal limits depend; a customer will be able to withdraw money up to a certain limit, in a month. Additionally, some banks may also offer discounts on purchases through their savings accounts, such as credit card holders.
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Article first published: Thursday October 7th, 2021, 12:39 PM [IST]