31 December 2023
Every individual has dreams and aspirations that they work for. You may want to buy a new car or build a downpayment corpus for your dream home. Or, you may simply want to save for an emergency.
Whatever your goal, it needs a solid financial foundation. This is where a savings account plays an important role. It can help you build the financial base for your dreams and aspirations. A savings account can be a secure vault for your hard-earned money, ensuring safety and growth.
With the right savings account, your money can grow steadily, while you enjoy easy access to funds when you need them.
But what exactly is a savings account, how does it function, and what are its other valuable features? Let’s answer these questions in detail.
Understanding the definition of savings account is crucial for making informed financial decisions.
A savings account is a type of bank account where one can deposit money. The money in the account earns interest as per the bank’s prevailing interest rates. These interest rates differ depending on your savings account type, account balance, and the bank's policies.
Savings accounts are preferred for their liquidity, negligible investment risks, and for the access to the various banking services that they allow.
Now that you know what a savings account is and its purpose, let’s have a look at how it works.
1. Once you open a savings account online, you can deposit your extra cash and salary into it.
2. You can access and manage your deposited funds through different modes like ATMs, online banking, or in-branch services.
3. While the money stays in your account, it earns interest and grows with time as per the bank interest rate.
4. By accessing your savings account online, you can make transfers and payments conveniently through NEFT, RTGS, IMPS, and UPI facilities. You can set up automatic payments for recurring bills, manage standing instructions, and access other banking services.
Simply put, a savings account simplifies the way you manage your daily finances. It is crucial to know the meaning of savings account and its workings to manage one’s finances more effectively.
From auto bill payments to 24/7 liquidity, here are some key features of a savings account:
Almost all savings accounts require you to maintain an average balance monthly/quarterly. Each bank sets its own average monthly or quarterly balance requirement, which can differ and change with time. If you don't maintain this balance, they may charge a fee. However, there are also zero-balance accounts that have no such requirements
Deposit Insurance and Credit Guarantee Corporation (DICGC) ensures both the principal amount and the accumulated interest stay insured. The insurance limit is ₹5 lakh and it covers deposits such as savings, fixed, current, and recurring deposits.
Savings account interest is subject to taxation. However, you can claim a deduction of up to ₹10,000 on the total savings account interest income under section 80TTA of the Income Tax Act, 1961. Senior citizens can qualify for more deductions of up to ₹50,000 annually for interest earned on savings accounts through section 80TTB.
With savings accounts, you get a chequebook to make cheque payments and an ATM card for cash withdrawals. Moreover, bank transfers via NEFT, RTGS, IMPS, and UPI add more convenience. You can use a debit card linked to your savings account for payments at shopping centres, eateries, malls, and more.
Mobile banking apps add an extra layer of convenience to your experience. For example, IndusInd Bank's INDIE app offers a personalised digital banking experience with advanced analytics and features. It allows the customisation of financial products and an instant credit line of up to ₹5 lakh with flexible usage and interest payment. You also get transparent rewards programs with up to 3% rewards, redeemable for cashback or vouchers.
Also Read: How to Easily Open a Savings Account Online with INDIE
Now that you have a better idea of what a savings account is, its working and features, let’s see why you should have one:
By depositing your money into a savings account, you are creating a safe and secure storage place for your savings. Banks have strong security measures that ensure your funds are protected.
As mentioned earlier, the money in your savings account earns interest as per the bank’s interest rate. If you want the money to grow, allow it to stay within the account. In addition, choose a banking partner that offers a high bank interest rate. This will help your savings grow considerably in the long run.
With a savings bank account, you can enjoy a high level of liquidity. That is, you can withdraw your funds through an ATM or make online transactions.
Many savings accounts come with additional perks and benefits to make your banking experience more enjoyable.
To know more about these rewards and to enjoy them, download the INDIE app today!
Savings accounts, with their combination of safety, accessibility, and the benefit of earning interest, are a valuable tool to manage your finances. To get more premium services, the best savings interest rates, the latest online facilities, and additional benefits, consider the INDIE Savings Account. This account’s customer-centric features make managing your savings effortless and beneficial. So, download the INDIE app to open a savings account and start your journey towards smart financial management today.
