What is a Savings Account?

Savings Account definition: 

A saving account is a type of bank account in which an account holder can get interested in their DepositFinancial institutions or Banks offer some interest on an individual’s saving account.  It is also called an interest-bearing deposit account. 

Opening Saving Account: 

     If an individual wants to open a savings account in a bank, an account holder should submit all necessary documents like identity proof, address proof, phone number, and Social Security Number (SSN) in any bank or credit union branches in the United States and coming to India we use AADHAR card as an identity card to open a savings account.

Features of Saving Account 

The main features of a savings account are: 

  •  Very safer, and reliable, and gives a modest interest rate. An individual having a savings account can easily park his money for short-term demands like buying a car or for vacation. 
  • Saving accounts is a good option for an individual for emergency purposes and also funds can be easily accessible. 
  • In general, the amount withdrawn from a savings account is unlimited. 
  • The interest that we earn on savings accounts is treated as taxable income. 

How Savings Account Works 

Banks or any other financial institutions use Savings accounts or any other type of deposit accounts as the main source of funds to give loans. So, the Savings account acts as one type of fundraiser for banks. 

Who offers Savings accounts?  

  •  In common we know an individual can open a savings account in any bank and deposit some money and gain interest on his deposits. An individual can open a savings account at every financial bank and Credit union. Savings accounts can be open virtually in traditional brick-and-mortar institutions. It can be operated online also. Nowadays some Investment companies and other brokerage firms also offer savings account options with good interest rates.  
  •  Savings account interest rate always fluctuates depends up on competitors' interest rates, irrespective of promising a fixed rate of interest for a specific date, financial institutions, banks, and credit unions may change their interest rates at any time. Federal funds rate changes can trigger financial institutions to adjust their interest rates on deposits. 
  • An individual should maintain a minimum balance in his savings account to avoid monthly fees, which vary from bank to bank. We should be aware of the rules of any account either savings or some other of a particular bank. This will help us to ensure our account should avoid diluting our earnings with fees. We can transfer money in many ways with our savings accounts such as online, at a branch or ATM, direct deposit, or through electronic transfers, or phones.

Advantages of Saving account: 

  • The main advantage of a Saving account provided by banks is to secure our money for future needs. The Federal Deposit Insurance Corporation (FDIC) is a freelance federal agency insuring deposits in U.S. banks and thrifts in the event of bank failures, which will secure our money against bank failures under our sock drawer. 
  • Keeping our unneeded funds in a savings account will not only earn interest but also funds in a savings account will remain liquid. 
  • Maintaining a savings account in the same bank or any other financial institution for a longer period offers instantaneous, deposits or withdrawals from a checking account to a saving account that has immediate interest gain. 
  • Financial institutions or banks offer us to open more savings accounts to save our excess money to meet our financial progressive goals. 

Disadvantages in Saving Account: 

  • Even though, funding in a savings account is safe and has easy access reliable, return on investments are comparatively less when compared to other saving instruments like deposit certificates, treasury bills, or stock investments. 
  • Withdrawals in savings accounts have been restricted to six times per month. 
  • The minimum balance should be maintained for some savings accounts. 

Maximize earnings through Savings Account

Benefits of Saving Account 

  •   One of the best technics for getting more earnings on savings accounts is a comparison of interest rates between banks, credit unions, and online bank saving accounts. Online banks are offering more interest on our savings, because of their less operational cost. 

Also read: What is Fixed Deposit Account

Conclusion 

 The above information gives us an idea about Savings accounts and their popularity till now.