A savings account is a type of bank account that is useful for salaried individuals with consistent monthly incomes. The Deposit Insurance and Credit Guarantee Corporation (DICGC), Ministry of Finance, insures savings accounts up to Rs. 1 lakh. Aside from a bank, you can also open a Post Office savings account. A Post Office savings account earns higher interest rates than a bank savings account. Occasionally, all banks do not have branches in distant sections of the country, but the Post Office has a better reach to rural locations.
Rate of Interest:
The primary distinction between a current account and a savings account is that the latter pays interest on deposits. The reason a savings account pays such a low rate of interest is that your money is safe in there until it is taken or paid out. Savings accounts offer interest rates ranging from 2.70 percent PA to 5.25 percent PA, depending on the net balance amount and the bank or Post Office.
Interest rate graphs for a few major banks
Bank Interest Rate (PA)
SBI 2.70%
HDFC 3.00%
ICICI 3.00%
Canara Bank 2.90%
(PNB) 3.00%
Bank Of India 2.90%
Axis Bank 3.00%
Kotak Mahindra 3.50%
In comparison to these rates, the Post Office savings account gives a 4% annual percentage rate (APY). As a result, the interest rate on a savings account is higher than that of other public or private banks. So, if you wish to open a savings account, you might look into the Post Office's options. The account will provide you with the same benefits, but at a higher interest rate. To open the account, a minimum balance of Rs. 500 is required.
Type of Savings Account:
Regular Savings Accounts, Salary-based Savings Accounts, Senior Citizens Savings Accounts, Minors' Savings Accounts, Zero Balance Savings Accounts, and Women's Savings Accounts are all examples of savings accounts. At the moment, the net banking option of savings accounts is an added bonus; you do not need to visit the bank in person to open the account or conduct transactions. A savings account has a lower minimum maintenance balance than a current account. You can pay your credit card payments immediately or transfer funds from your savings account.
A savings account also aids in the organisation of the account holder's income tax returns. A savings account's liquidity is relatively straightforward, but the withdrawal limitations vary; a customer will be able to withdraw money up to a certain amount each month. Furthermore, some banks, like credit card companies, may give discounts on purchases made through their savings accounts.
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