Saving a chunk of your disposable income is a wise financial move. But it can be challenging to maintain this habit. Hence, many opt for a Savings Account.
A Savings Bank Account is an interest-bearing account. It lets you park your surplus funds safely and earn interest on deposits. This way, your idle money grows effectively without you having to do anything. But before you consider opening this account, it is essential to know more about it. So, here are some commonly asked questions on Savings Accounts answered for your understanding:
Q.1) How does a Savings Account work?
Once you open the account, you can deposit your money in it. You can also withdraw the same whenever need be. Over time, depending on the Savings Account interest rates issued by your bank, you start earning interest on the funds in the account.
Q.2) Do you need to maintain a minimum balance?
Yes, you must maintain the minimum balance mandated by your bank in the account. The minimum balance refers to the minimum amount you must keep in your Savings Account to use it. In most cases, it ranges between Rs. 500 to Rs. 1,000. However, some private players may also demand a higher balance of up to Rs. 10,000. Hence, it is best not to spend beyond the amount as it garners a penalty charge.
Q.3) Are Savings Accounts safe?
Most of the investment options you come across are market-driven. Hence, they are subject to various market risks. But a Savings Account is not influenced by market fluctuations. It is one of the safest investment options that does not require extensive investment knowledge.You need to deposit funds from time to time. Besides, there is no need to study the market to continue depositing.
Q.4) How to pick a bank to open a Savings Account?
These days, almost every bank and financial institutions offer Savings Account facilities. To avoid getting overwhelmed, consider these parameters when making a pick:
- The range of services offered
- Availability of a Banking app for easy fund management
- The efficiency of customer care support
- Interest rates offered
Q.5) Do Savings Accounts have a lock-in period?
Many people believe that this type of account has a lock-in period. However, that is not true. Savings Accounts do not have a lock-in period.
You can withdraw funds from the account using your Debit Card whenever need be. The only thing you must ensure is that you do not exceed the minimum balance amount.
Q.6) How is a Savings Account different from a Current Account?
A Savings Account is ideally used to save money and earn interest on deposits. It is designed explicitly for salaried individuals with steady incomes. On the other hand, a Current Account is useful for financial transactions by business entities like traders, business people, or even entrepreneurs.