What is a Savings Account and how does it work?

 Savings Accounts are at the core of personal finance. They offer you a safe and accessible avenue to grow your money while maintaining liquidity at the same time. Let us discover more about Savings Accounts, understand what they are, how they work, their various uses, and the process of opening one.

About Savings Accounts

Almost all banks offer a Savings Account. It is a Bank Account crafted primarily to save money. Such an account usually helps you with long-term savings. It also lets you earn interest on the funds you deposit in the account at a specific rate. Today, you can conveniently open a Savings Account online or visit a physical branch to open one.

How to open an account?

When opening a Savings Account, you can easily skip the commute to the branch and the hassle of standing in long queues. Instead, you can opt for the online route. The process is simple. In addition, you can open an account right from your couch. To open an account, compare the various banks and the accounts offered. Choose one that suits your requirements. Then, visit the website or download the Banking app.

Complete the account opening process and verify your details. Once done, your bank verifies the KYC details and opens the account in no time. You can then use the account to send and receive funds and enjoy other advantages.

How does a Savings Account work?

Once you open the account and deposit money, the funds in your Savings Account start earning interest. The interest is calculated by your bank daily based on the closing balance maintained. However, the Savings Account interest rate is credited to your account at specific intervals. This may be half-yearly, quarterly, or monthly.

You can withdraw or deposit money in your account using an ATM or by visiting a branch. You can also use online fund transfers. The minimum balance you need to maintain varies across banks.

Uses

Whether you do an online Savings Account opening or visit the bank to open one, this account has several uses:

• You can use this account to create an emergency fund to cover unforeseen expenses.
• While the interest rates may not be high, it offers a secure way to grow your savings over time. You can also use the funds in your account to open Term Deposits or invest in Mutual Funds.
• Parents usually open Savings Accounts for their kids to teach them ways to save and manage money.
• You can use the app to transfer money online to payees, pay bills on time, etc.
• You can also enjoy curated benefits on your Debit Card.
• When you maintain a steady balance, banks may provide Loans and Credit Cards.