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5 Advantages of Opening a Saving Account

A savings account is a deposit account that pays interest and is held with a bank or other financial organisation. Despite the fact that these accounts often yield a low-interest rate, their safety and stability make them an excellent choice for storing funds for short-term requirements.

Financial institutions use savings and other deposit accounts as major sources of funding for loans. As a result, savings accounts are available at almost every bank or credit union, whether they are traditional brick-and-mortar establishments or only function online. Savings accounts are also available at several investing and brokerage organisations.

Between April and October 2021, a little less than 1.9 crore Demat accounts were registered, averaging 26.7 lakh per month, according to a news item published in the Times of India (ToI) on December 14, 2021.

The number of accounts opened in the first seven months of this fiscal year is up by more than 30% over the previous full fiscal year.

The following are some of the most significant advantages of having a savings account:

  1. Make Money by Earning Interest

A savings account allows you to earn interest on your money. Banks are now offering greater interest rates and a slew of other perks to entice new customers, including savings on locker rents, unlimited ATM transactions, and more.

Furthermore, several banks provide a variety of savings accounts to satisfy the diverse demands of their consumers.

  1. A Savings Account is the Safest Investment Function

Keeping your money in a bank Savings Account is the simplest way to keep it safe. If you have a large amount of cash on hand, it is more likely to be stolen, misplaced, or damaged in the event of a disaster such as a fire.

One of the most significant benefits you get when you open a savings account is that, unlike most other investment options, it does not invest your money while still providing moderate returns. To make use of this function, all you have to do is make a deposit into your savings account.

  1. Money Management Made Simple

Keeping your money in a bank Savings Account is the simplest way to keep it safe. If you have a large amount of cash on hand, it is more likely to be stolen, misplaced, or damaged in the event of a disaster such as a fire.

A Savings Account enables easy money management by allowing you to send and receive payments as well as transfer monies between accounts. You can also use ATM services to get your money.

  1. Builds savings habit

When you compare the various investment options, you’ll notice that a savings account is the most cost-effective. To continue collecting interest, you just simply maintain a minimum balance on your account which also build a savings habit in the individual.

Every bank may have a different minimum deposit amount. The interest rate offered by most banks is slightly greater than the rate of inflation.

While this may appear to be a means to allow your money to grow over time, the underlying benefit is that the real worth of your money remains consistent.

  1. Easily Available and Accessible

Unlike long-term investment accounts, savings accounts are simple to open and you can withdraw and deposit money at ATMs or via 24-hour online access at any time (within federal limits).

Many financial institutions allow you to link your savings account to other accounts, such as a checking account, which can save you money on overdraft fees. This also enables you to move money swiftly from one account to another.

The advantages of having a savings account have nothing to do with how much money you make. Instead, think about the purpose of your account, as well as your liquidity and access. A savings account is perhaps the greatest option for your emergency money.

Some experts advocate keeping at least six months’ worth of living expenses in a savings account, but even a few thousand dollars can aid in an emergency.

Over to you…

However, there are a few things to keep in mind when opening a savings account. For some people, the savings account’s liquidity is too difficult to resist. So, if you’re someone who is often tempted to withdraw money from your Savings Account, you should exercise restraint.

Another thing to consider is that a Fixed Deposit may be a better alternative for you if you want to keep your money secure and untouched for a set period of time.

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