Savings bank account is safe and highly liquid. Besides, we also earn nominal interest on the money saved in our account
The purpose of a savings account is to develop the habit of saving. At the same time, a savings account allows us to use our money whenever we want. Savings bank account is safe and highly liquid. Besides, we also earn nominal interest on the money saved in our account. The interest rate is compounded on a half-yearly basis.
Savings account can be opened and operated by an individual. These accounts can also be opened in joint names. Minors over the age of 10 years can open an account in their name. In case of HUF (Hindu Undivided Family), the savings account can be opened in the name of the head of the family i.e. karta—provided that the HUF is not engaged in any business activity. However, we are often careless while opening a savings account. We just open an account to keep our money without knowing the pros & cons of opening a saving account with the bank.
You need to research well before opening a savings account or else you may end up earning a lower interest rate or paying more for certain services. To maximise your earning potential, you need to check a number of things before opening your savings bank account.
- What is the interest rate offered by the bank
- What is the minimum balance to be maintained in the account
- What is the penalty if the balance is less than minimum balance
- What is the penalty in case the cheques issued or other financial instruments are returned
- What are the charges applicable on any collection facilities that the bank offers
- What are the charges for issuing of new cheque books
- Are there any limits on cash withdrawals
- Does the bank offer Internet and mobile banking facilities
It is essential to check, if the bank offers Internet and mobile banking facilities since you can conduct transactions from your home or office and at your convenient time. Also, most banks now charge you for specified physical transactions at the bank branch, whereas these are free if you conduct them online or over the phone.
Read the fine print
Before opening a savings account, read the fine print because most banks now charge extra for transactions or services that you were not paying for earlier and may not even avail of.
Below is the list of documents that a bank will ask you to furnish, as part of their KYC (know your customer) procedure to open a savings account.
- Residence proof
- Passport size photographs
- PAN Card details
- Introduction of an existing account holder
So if you don’t have a savings account, research well and open your savings account. This is will also help you develop the habit of saving.