Savings Accounts Guide

Personal

5 min read | 5 months ago

Savings accounts are the most basic addition to any financial portfolio and are indispensable for any individual. There are several options available, right from regular savings bank accounts to kid’s bank accounts and more. Here is a guide to the same for your perusal.

What is a Savings Account?

A savings account is a fundamental tool for financial transactions and savings. It is an account that you will open with your chosen bank and will help you with daily/regular savings, payments, and transfers. You can choose to open a children’s savings account for your kids’ future and to teach them financial responsibility as well. It is not just adults or children; savings accounts can be opened by the Government, trusts, societies, and even HUFs (Hindu Undivided Families). You can open a savings account individually or choose a joint account with your spouse or any other family member.

How Do Savings Accounts Work?

There are several operations/functionalities of savings accounts that are listed below.

You can make deposits via cheque if your bank allows the same. You can also check the status of the same through your online/mobile banking application.

Direct deposit facilities will also enable you to undertake fund transfers to your savings account directly.

You can withdraw cash from your savings bank account or through ATMs, while also depositing the same into your account at the bank.

You can request for cheque books and passbooks from the bank, depending on your requirements.

You can transfer funds online across banks in multiple modes including NEFT, IMPS, RTGS, and so on.

You can transfer funds to your savings bank account internally from your checking account anytime you wish.

What Are the Types of Savings Accounts?

Here are some of the common types of savings accounts that are often available across banks and other financial institutions.

Regular Savings Accounts - These are the most basic and simplest forms of savings accounts. You can open them right after submitting the KYC (know your customer) documents while completing the application form with all your other necessary details. You will begin earning interest from your savings account deposit right away. Some banks may have a minimum average balance requirement, while some may have charges for account maintenance.

Zero Balance Savings Account - These are also basic savings accounts without restrictions on maintaining a certain minimum average monthly balance. You may open this account easily and maintain it conveniently without requiring any minimum deposit. Some banks may have restrictions on the number of withdrawals at ATMs for these accounts, while some may not provide cheque book facilities or have limitations on the debit card types that are available for these accounts.

Savings Accounts for Senior Citizens - These are savings accounts tailored to the needs of senior citizens (who are above the age of 60), while sometimes offering privileges like extra interest rates, lower credit interest, dedicated relationship managers, and so on.

Savings Account for Women - These are savings bank accounts that are tailored for women and may have several advantages, including exclusive debit cards, preferential offers on credit cards and loans, discounts on bank lockers, unlimited cash withdrawals at ATMs, complimentary cheque books with multi-city acceptance, relaxed minimum balance requirements, and so on.

Savings Accounts for Kids - Legal guardians or parents may open savings accounts for their children who are under 18 years of age. They can provide a declaration in this regard along with proper identification proof. These accounts help children understand the value of savings and inculcate financial discipline from an early age.

Family Savings Account - These are accounts that enable multiple family members to open their accounts under a single family ID, if this facility is available with the bank in question. They can get several benefits including FDs and RDs while the list of members may include spouses, children, parents, in-laws, grandchildren, and grandparents.

Salary Accounts - These are savings bank accounts for salaried professionals who choose to get their monthly salaries into these accounts. Some key features of these accounts include international debit cards, free cheque books, zero balance accounts, personal accidental insurance coverage as a complimentary feature at times, preferential rates of interest on loans, and more.

Why Choose a Savings Bank Account

Here are some reasons why you should opt for a savings bank account.

Earn money on your deposits in the form of interest.

Keep your money securely in the bank and build up your savings for the future.

You can easily withdraw money whenever you need the same, while getting access to your money online and across ATMs anywhere in the country.

You can use your savings account to start planning for various financial objectives, including purchasing a home, building an emergency corpus, or purchasing a vehicle, for instance.

You can get several additional benefits once you are a customer of the bank, including preferential loan offers and interest rates along with other exclusive promotions and privileges.

You can build up financial discipline by maintaining a healthy savings account balance.

You will require a savings account to receive your income/salary and you can use your account to make all your payments and conduct transactions.

What Are the Savings Bank Account Interest Rates?

Here are the average interest rates that you can expect on your savings account balance at leading banks like Unity Small Finance Bank.

Up to 1 lakh - 6%

More than 1 lakh to 5 lakhs - 7.25%

More than 5 lakhs - 7.50%

The rates of interest (per annum) are subject to periodic changes, depending on the policies of the bank. They are often paid on a monthly basis for maximum convenience, while some banks pay them on a quarterly basis.

What Are the Savings Account Charges/Fees?

There are often some service charges and other fees associated with savings bank accounts. Some institutions, like Unity Small Finance Bank, offer free look periods till a certain time without levying any charges. This enables customers to understand the workings of their savings bank accounts and choose whether they wish to continue with the same or not.

Otherwise, here are a few common charges that you can expect (the exact figures vary from one bank to another).

Issuing duplicate account statements - Soft/physical copy (you can ask for e-statements that will be sent to your registered email address)

Duplicate passbook issuance

Issuance of demand drafts

Cheque return/deposited but returned unpaid charges

Account closure charges depending on the tenure

Stop payment charges

NEFT/RTGS charges

Debit card transaction charges (if applicable, i.e., for transactions crossing the limit for non-home bank ATMs)

What is the Average Monthly Balance for Savings Accounts?

This average monthly balance varies across banks. It is calculated by dividing the total sum of all the End of Day balances for a particular month by the number of days in the same. It can vary between Rs. 5,000 – Rs. 10,000, depending on your location. This is the amount that you should maintain as the minimum sum every month in your account.

What Is the FATCA Declaration?

The full form of FATCA is the Foreign Account Tax Compliance Act. Based on the guidelines of the RBI (Reserve Bank of India), all Indian banks are required to collect the FATCA from each customer opening a savings account with them. This rule was implemented to keep tax evasion at bay while ensuring stringent compliance to tax-based regulations and guidelines alongside. The act majorly aims at combating tax avoidance (offshore) by US residents and citizens.

How to Open a Savings Bank Account?

You can open a savings bank account online by going to the official website of your bank or downloading the mobile application. Once you register, you can choose the account type and then provide necessary information like your date of birth, name, address, Aadhar and PAN details, and then finish KYC procedures. After your documents are verified, your savings bank account will be activated thereafter.

You can also open your savings account offline by visiting the nearest branch of your bank and then getting the application form. Fill it up and furnish the photocopies (self-attested) of your address and identity proof. You can then make your deposit based on the type of account and after the final round of verification, the bank will activate your savings account likewise.

Eligibility Criteria For Savings Accounts

The eligibility criteria for savings accounts usually include the following:

Resident individuals (single/joint account)

Minors under legal/natural guardian

Societies, trusts, Government

Hindu undivided families (HUFs)

What are the Documents Required to Open Savings Accounts?

The documents required to open savings bank accounts vary across banks and financial institutions. They may include the following:

Identity proof (Voter ID Card/Passport/PAN Card/Driving License, etc)

Address Proof (Voter ID Card/Passport/Driving License/Aadhar Card, etc)

PAN Card

Passport-sized photographs

As can be seen, a savings bank account is the most basic financial tool that you should start your journey with. It will help you make payments and save your earnings/money securely. You can also conduct transactions, pay for various goods and services, and choose other financial products like FDs, RDs, and lockers which are linked to the savings account. These accounts also give you benefits like digital banking, debit cards (for usage at ATMs), RTGS/NEFT transactions, cheque books for payments, passbooks, and more. You will also get dedicated relationship managers at some banks like Unity Small Finance Bank for guidance and prompt assistance.

About Unity Small Finance Bank

Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.