What are Savings Accounts

What are Savings Accounts

Saving money is essential for a secure financial future. In earlier times, individuals stored their savings in trunks, bags, and hidden compartments within their homes, making them vulnerable to theft, loss, or damage. Nowadays, people rely on savings accounts for this purpose, benefiting from the added advantage of earning interest over time.

"In this blog, we'll offer you an in-depth guide to savings accounts, covering everything from their definition and operation to the top interest rates available. We'll also delve into zero balance savings accounts, their interest rates, and the distinctions between current and savings accounts.

Understanding a Savings Account

A savings account is a type of bank account intended to help you save money while earning interest on your deposits."

When you open a savings account, you deposit money into it and earn interest on the balance. Typically, the interest rate for a savings account is lower than other deposit types, such as fixed deposits, which range from 3% to 4%. However, savings accounts offer the advantage of maintaining liquidity.

Most savings accounts come with additional features like internet banking, mobile banking, ATM access, and numerous fund transfer options such as NEFT, RTGS, IMPS, and UPI. These features make it easy to manage your money and monitor your savings. You also receive complementary debit cards, which might earn you reward points, airport lounge access, cashbacks, and more.

Benefits & Features of Savings Account

Here are the features of a savings account in India:

• Interest rates ranging from 2.75% to 8% (subject to change)
• Interest calculated based on account balance
• A valid PAN Card is required to open a savings account in India
• Interest is mostly credited annually (some banks like IDFC First offer monthly credits)
• A savings account is necessary for purchasing any financial product
• Minimum balance requirement (except for zero balance accounts)

In addition to the features mentioned earlier, opening a savings account in India offers several advantages, such as:

• Encouraging the habit of saving money
• Special savings accounts for children to foster saving habits and teach financial responsibility
• ATM services for withdrawals, balance checks, and debit card PIN generation
• Complimentary debit cards based on eligibility
• Access to net banking and mobile banking services

Top Savings Account Interest Rates in India for 2024

Listed below are the highest interest-paying savings accounts in India for 2024:

Top Savings Accounts by Commercial Private Sector Banks in India, 2024

Top Savings Accounts by Commercial Public Sector Banks in India

Best Savings Accounts by Small Finance Banks in India, 2024

How to Open a Savings Account

Opening a savings bank account is a straightforward process requiring only a few steps and minimal documentation, usually accompanied by the offer of a complimentary debit card. Here’s what you need to do to open a savings account:

Documents Required to Open a Savings Account in India:

• PAN Card
• Aadhaar Card* (optional but necessary for government subsidies and schemes)
• Completed and signed KYC Form
• Passport-sized photograph(s)

Ensure that your Aadhaar Card is linked with your PAN Card

To get started, visit your chosen bank with the above documents. A bank official will verify your documents, after which your account will be opened. Before you leave the branch, be sure to collect your account details, complimentary passbook, chequebook, debit card, and internet banking kit.

The process for opening a savings account online is similar, with the primary difference being that you visit the bank’s official website rather than the physical branch. You’ll need to furnish digital copies of the required documents and complete verification via a virtual call. Note that an Aadhaar Card is necessary for opening a savings account online, along with a PAN Card. Also, these accounts are referred to as digital savings accounts.

Types of Savings Bank Accounts in India

There are various types of savings accounts available in India, including:

Regular Savings Account

A simple type of savings account requiring a minimum monthly average balance. These accounts can be opened by individuals, HUFs, and others at a bank branch with full KYC compliance.

Zero Balance Savings Account

Highly popular and sought-after due to the absence of a minimum balance requirement. Ideal for students, homemakers, or those with irregular incomes. Check for the best zero balance savings accounts.

Digital Savings Account

A newer addition, this type of savings account can be opened instantly via online or mobile banking. Customers need to provide their PAN and Aadhaar cards and complete video verification. Examples include Kotak 811 Savings Account by Kotak Mahindra Bank, Insta Savings Account by SBI, Digital Savings Account by Standard Chartered Bank, and DigiBank by DBS Bank.

Salary Savings Account

Designed specifically for salaried employees in either private or public sectors. These accounts are opened to facilitate the direct deposit of salaries.

Premium Savings Account

Senior Citizens Savings Account

Designed for retirees or individuals aged 60 and above, this type of account caters specifically to senior citizens. Noteworthy options for retirement savings accounts include:

- Indian Bank Pensioners Savings Account

- ICICI Bank Seniors Club Savings Account

- Bank of Baroda Pensioners Savings Account

- HDFC Bank Pension Savings Account

- Kotak Mahindra Grand Savings Account for Senior Citizens

- Canara Bank Jeevandhara SB Account for Senior Citizens

- IndusInd Bank Senior Citizens Savings Account

- Axis Bank Senior Privilege Savings Account

Savings Account for Kids

Children aged 10 to 18, under the care of parents or legal guardians, can open a savings account in most Indian banks. These accounts are geared towards encouraging early savings habits. Typically, they come with a debit card that has limited withdrawal capabilities. Many banks may require a minimum balance but often do not impose charges for not maintaining it. Here are some top savings accounts for kids offered by leading banks in India as of 2023:

- SBI Savings Account for Minor

- HDFC Kids Savings Account and Super Kids Savings Account

- Bank of Baroda Savings Account for Minor (Baroda Champ Account)

- PNB Junior SF Account for Minor

- ICICI Young Stars Account and ICICI Smart Stars Account for Minor

- Axis Bank Future Star Savings Account for Kids

- Kotak Junior Savings Account

Zero Balance Savings Accounts by Top Banks in India, 2024

Below is a list of the best zero balance savings accounts available in India offered by "Presented both here public are and the private leading banks: zero balance savings accounts available in India, offered by both public and private banks:

Difference between Current Account and Savings Account

In India, current accounts and savings accounts serve different purposes and offer distinct features and benefits.

A current account is primarily used by businesses, companies, and individuals who conduct a high volume of transactions. Key features of a current account in India include:

- Unlimited transactions

- Availability of an overdraft facility

- Higher minimum balance requirements compared to a savings account

- Lower or no interest rates in contrast to a savings account

Conversely, a savings account is designed for individuals who aim to save money over an extended period. Major features of a savings account are:

- Limited monthly transactions, particularly at ATMs and POS

- Ideal for salaried individuals

- Typically, no overdraft facility

- Lower minimum balance requirements compared to a current account

- Interest earnings, unlike a current account

In summary, a current account in India is tailored for frequent, high-volume transactions, while a savings account suits those looking to save money and earn interest over time.