The savings bank account.

The Savings Bank Account.

This post is about the Savings Bank Account. The savings bank account is for saving money which could either be for a short duration of time or for a longer period. The savings bank account is flexible because it can be used for our varied requirements and choices. If somebody asks you: Do you have a bank account? He enquires about your savings bank account and not about RD or FD.

The Importance of Savings Bank Account.

The savings bank account has the first place in financial planning. The first account we open in a bank is the savings account. It is popularly called the SB account. It is the kindergarten of finance. It saves your money, gives you the permission to draw your money or deposit it at any time. Almost all of your future planning is dependent on this account. If you maintain this account in a proper manner, you will get many offers from bank, from credit card to loan. The savings bank account acts as a pivot from which other accounts could be joined.

The Main Attractions of SB Account.

The savings bank account has a number of advantages which are unique and attractive. They are:

(1) The SB account allows you to save the least amount of money. What does this mean? It means that in SB account you can deposit any amount of money no matter how less it is. This is a feature which helps savings. People have a misconception that a deposit has to be big whenever they are made. But this is a wrong notion for a savings account. A savings account is simply an account for saving, no matter how much the money is.

(2) The savings account is for lifetime. It does not have a tenure. It stays with you throughout your life saving money.

(3) It is the only account which gives you the freedom to go to any place or any city without worrying about cash. You don't have to carry cash wherever you go because the bank gives you the access for your money if you have this account.

(4) The SB account helps you to open an RD or FD without visiting the bank. It gives you the freedom to invest your money in avenues of your choice.

(5) The SB account gives you the identity which is recognized by other banks and government agencies. A bank reconciliation statement or the Pass Book is an example for this.

(6) The Debit Card and Credit Card operates through this account. This account supports different transactions such as transferring money to another account or receiving money and making payments or receiving payments. It supports different methods of transactions like net banking or mobile banking and it can also be linked to various payment portals and Apps like the Gpay from Google.

(7) The SB account is the primary deposit account. The money you put in it receives an interest, which even though small, helps you to save. Small interest makes it small savings which many people don't have.

(8) The SB account has no restrictions on the number of account one should have. You can open and operate multiple accounts if you need them. People who have lots of money usually go for multiple SB accounts. The bank insists you to maintain minimum account balance and imposes a fine for not doing so. It is therefore not beneficial for the poor to open multiple SB accounts and pay penalties for not maintaining them.

The Providers of Savings Account.

Banks are the main providers of savings account. Public sector banks and private banks have this account. They are well regulated and are the most preferred. They have the most number of customers. The next comes the post office. Post offices provide savings facilities just like banks do, though they are not as publicized or affluent as banks are.

The Low Rate of Interest.

SB account has a low rate of interest in comparison to other deposit accounts. SB gives you around 3 to 4 percent of interest annually when FD and RD gives you around 5 to 5.5 percent for the same duration. People who are too strict about money seldom allow their money to remain in this account for long: they deposit it somewhere else where they can get a better interest. This is logical, but it has drawbacks too. If the SB account is kept empty or if just the minimum required balance is maintained in it, you will be forced to withdraw your money from other deposits for your immediate needs. This will dilute benefits gained through a high interest. To avoid such situations, it is advisable to maintain the SB account in good condition.

SB account is not meant for transactions alone; it is a good deposit account too. Although it gives you less interest, its importance is no less than FD and RD or for that matter, for any other form of savings.

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