Savings Account - Features, Benefits & Interest Rates

Features of a Savings Account:

The following are the key features of a savings account: 

1. Interest rate offered to general customer ranges between 2.50% to 8.00% 
2. Additional interest rate of 0.50% above regular rates offered to the senior citizen customers
3. Bank deposit up to Rs.5 lakh is insured by DICGC (Deposit Insurance and Credit Guarantee Corporation) 
4. Ensures high liquidity for transferring or withdrawing as many times as accountholders wants 
5. Enables accountholder to link savings account with fixed deposits in the same bank 
6. Savings account holders are provided with ATM or debit cards for making online payment, or cash withdrawals 
7. Enables users to perform fund transfer through UPI (Unified Payment Interface), NEFT (NEFT National Electronic Fund Transfer), RTGS (Real Time Gross Settlement), IMPS (Immediate Payment Service), net banking, mobile banking, or by visiting the branch
8. Does not impose any limitation on the amount that can be deposited 
9. Enables users to operate their savings account through net banking, mobile banking, SMS banking, etc. 
10. Monthly Average Balance (MAB) requirements should be adhered by the accountholders 
11. Offers various discounts and offers on savings account deposits and debit cards linked to it 
12. Interest payment option can be chosen by the accountholder- monthly, quarterly, semi-annually, and yearly

Types of Savings Accounts:

The following are the types of savings accounts: 

1. Regular Savings Account: Regular Savings Account is one of the most common simplest savings accounts that one can open after completing e-KYC (Know Your Customer) and earn interest from the deposit. Some banks maintain a minimum balance and charge a minimal annual fee for account maintenance.  
2. Zero Balance or Basic Savings Bank Deposit Account:  Ideal for individuals seeking a best zero-balance savings account option, these accounts eliminate the need for maintaining a minimum average monthly balance (MAB). They can be opened and maintained without any initial deposit. Crucially, there is no minimum balance requirement, banks may limit the number of ATM withdrawals, do not offer cheque book facility, and limit the type of debit card available.   
3. Senior Citizens’ Savings Account: Senior Citizen Savings Account are for individuals above 60 years of age and offer special privileges to them, such as an additional interest rate, dedicated relationships manager, lower interest on credit, etc. 

1. Women’s Savings Account: Women’s Savings Account are specially designed for women and comes with various privileges for women, such as special debit cards for women, preferential loan and credit offers, discounts on lockers, complimentary multicity cheque books, unlimited ATM cash withdrawals, relaxation on minimum balance requirement, etc.

1. Kids’ Savings Account: Kids Savings Accounts are designed to help children learn about saving and responsible money management. Parents or guardians can open these accounts for children under 18 years of age by providing identification proof and a declaration of guardianship. These account provide regulated deposit schemes and specify the spending limit to inculcate disciplined financial behaviour among children from the very beginning. 
2. Instant Digital Savings Account: These accounts can be opened online within a few seconds via mobile or banking applications by completing the KYC procedures. The bank keeps the account on hold in case the accountholder does not complete the KYC procedure within a specific period. Some banks set the maximum deposit limit of these accounts up to Rs.1 lakh. 
3. Salary Account: Salary Account are for salaried accountholders who receive their monthly salary in these accounts. Some of the significant features of these accounts, such as free cheque book, international debit card, zero balance accounts, complementary personal accidental insurance cover, preferential interest rates on loans, etc. 
4. Family Savings Account: Family Savings Account enable family members t open multiple accounts under one family ID and allows them to avail various benefits, such as recurring deposit, fixed deposit, etc. Family members covered under this account are parents, spouse, children, in-laws, grandparents, grandchildren, etc.  

Eligibility Criteria to Open a Savings Account:

Here is the list of eligibility criteria to open a savings account: 

1. Must be above 18 years of age 
2. Applicants below 18 years of age can open minor or kids savings accounts 
3. Should resident of India 
4. Foreign individuals residing in India can open only specific savings accounts offered by few banks 

Documents Required to Open a Savings Account:

Here is the list of documents required to open a savings account: 

1. PAN card
2. Aadhar card, for linking it with savings account to receive various eligible government subsidies 
3. Other documents such as identity and residential proof that includes Voter ID cards, ration cards, driving licence, etc. 
4. Photograph or video as required depending on account type 

Some of the Best Savings Account Interest Rate: 

Here is the list of various types of banking sectors and their corresponding savings account interest rates: 

1. Public Sector Banks 

Here is the list of top Public Sector Banks and their savings account interest rates: 

1. Private Sector Banks 

Here is the list of top Private Sector Banks and their savings account interest rates: 

Small Finance Banks (SFB) 

Here is the list of top small finance sector banks and their savings account interest rates: 

How Does a Savings Account Work? 

The following are the features of a savings account that ensures its functionalities: 

1. Deposit Cheques: Deposits can be made through cheque if allowed by the respective banks and the status of the deposit can also be checked through the bank’s mobile application. 
2. Direct Deposit: Through the direct deposit facility, you can transfer your funds directly to your savings account.
3. Deposit or Withdraw Cash: Withdrawals or cash deposits can be done through ATM and by visiting bank’s branch. 
4. Request a Cheque: You can request your bank to issue a cheque using the funds in your savings account. 
5. Electronic Transfers (Bank to Bank): Savings account offers online fund transfer option from one bank to another through various modes, such as IMPS (Immediate Payment Service), NEFT (National Electronic Fund Transfer), and RTGS (Real Time Gross Settlement). 
6. Transfer from Checking to Savings (Internal): Savings account enables you to transfer funds from your checking account to savings account internally and it can be done anytime instantaneously. 

How to Open a Savings Account in India? 

The following are methods to open a saving account in India: 

Online 

Here are the steps to open a savings account in India online: 

1. Visit the official website or the download the mobile application of the bank 

1. Select the type of account you want to open

Provide the required details as mentioned, such as: 

1. Name 
2. Date of birth 

1. PAN 
2. Aadhar

1. Address

1. Complete the KYC process 

After successful verification of the documents, the savings account will be activated

Offline 

The following are the steps to open savings account in India through offline mode: 

1. Visit the nearest bank’s branch 
2. Obtain the application for opening savings accounts 
3. Provide the self-attested photocopies of identity and address proof 
4. As per the account type, deposit the required amount 
5. After depositing money and successfully verification, savings account will be activated by the bank 

Advantages and Disadvantages of Savings Account 

The following are the advantages and disadvantages of savings account: 

Advantages: 

The following are the advantages of the savings account: 

1. Allows to set standing instruction for bill payments
2. Withdrawal or deposit can be done anytime 
3. Accountholders can withdraw their funds from any of the bank’s ATMs across the country 
4. In case of bank defaults, savings account deposit up to Rs.5 lakh is insured by DICGC 
5. Fund transfer through savings account can be done through both offline and online mode 
6. Offers add-on insurance benefits, such as lost card liability, health insurance, personal accident insurance cover, etc.
7. Depending on the type of account and debit card provided by the savings account, special offers and discounts will be provided to the accountholders 

Disadvantages: 

The following are the disadvantages of the savings account: 

1. Savings account will charge penalty on the accountholder for not maintaining a minimum balance or Monthly Average Balance (MAB) 
2. Savings account withdrawal through ATMs incur a set fee to accountholder after exceeding the maximum number of free transactions
3. The money deposited in the bank will generate relatively low interest rates than other investment option 

Ways to Maximize your Earnings from a Savings Account 

The following are the ways to maximise your earnings from a savings account: 

1. Taxes: You can maximise you are earning from a savings account by claiming a tax deduction on the interest earned in your savings account. Under Section 80TTA of the Income Tax Act of 1961, interest up to Rs.10,000 is tax free for accountholders under 60 years of age. While, under Section 80 TTB of the Income Tax Act of 1961, accountholders above 60 years of age can claim tax deduction for interest earned up to Rs.50,000. 
2. High rate of interest: To maximise your earnings from savings account, research online the interest rates offered by various banks and opt for the bank that offers the highest rate of interest on saving account deposit. 

How much should you keep in the savings accounts? 

Here are the details of how much you should you keep in the savings account: 

1. The banks and credit unions limit the sum of money in the CD account, savings account, money market, or checking account and the limit is set as per the account type or the total amount of all your accounts. 
2. Depending on the bank, the amount you would keep in your savings account may vary, which may be higher, lower, or nonexistence. Check the bank’s website or customer agreement for further details. 

How to Select the Most Suitable Savings Account? 

The following are the significant parameters that should be considered before selecting the most suitable savings account: 

1. Minimum Balance Requirement: Some banks specify the minimum account balance amount, which if not maintained, the bank charges a penalty to the accountholder. While some banks offer zero balance accounts which are easy to maintain where you can charges imposed even if the account balance is zero, these types of accounts are one of the most suitable options provided they cater to all your requirements. 
2. Savings Account Interest Rate:  The savings account interest rate offered by most Indian banks is generally 2.50%. Research online to opt for the savings bank account that offers the highest interest rate."  
3. Low Account Maintenance Charges: Most of the Indian banks offers savings account that charges various service charges for providing services, such as cheque book issuance charges, ATM card annual fees, fund transfer charges, ATM withdrawal fees, statement issuance charges, etc. Opt for those savings account that charges affordable cost on savings accounts services. 
4. Debit Cards Features: Opt for those banks that offer debit cards with various features, such as joining benefits, complimentary movie tickets, travel benefits, discounts on purchases, no-cost or low-cost EMIs, along with several other discounts, offers, and deals.  

1. Additional Features: Check for those banks that offer additional features with savings accounts, such as free cheque book, net and mobile banking, doorstep cash deposit or withdrawal, etc.