Online Savings Account vs. Traditional Savings Savings: Making the Right Choice
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  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors

Saving money is one of the most important things to ensure complete financial well-being. Whether it's saving for a vacation, a new gadget, or an emergency fund, the ability to save money is a skill everyone needs to develop. But where should you keep your saved money? That's where savings accounts help. These accounts let you deposit money and earn interest on the balance. However, it's not enough to just save money. You should also choose the right savings account to keep your cash for better growth and accessibility.

Traditional savings accounts have been around for decades, offering a simple way to save money. Offered by various banks and financial institutions, they typically require you to visit a branch to open an account. However, with the rise of digital technology, there is a new player: online savings accounts. This brings the question: which account is right for you?

Let's find out the pros and cons of each type of savings account, their features, and how they differ.

  • Account opening process

The online saving account opening process is quick and easy. It offers a seamless application process that can be completed online. This saves you time and eliminates the need to visit a physical bank branch to open an account. You can apply and verify your identity through a simple video KYC process, and the account activation happens quickly.

Opening a traditional savings account requires a physical visit to a bank branch, filling out lengthy forms, providing hard copies of identification documents, and waiting for approval. 

  • Instant banking services

Online savings accounts provide great convenience with their digital capabilities. With features like online bill payments, fund transfers, and 24-hour access to your account, managing your account is incredibly fast and effortless. Moreover, you can open fixed deposits, check savings account interest rates, bank statements, transaction history, and other account details 24x7, providing greater convenience and accessibility.

Traditional savings accounts often require in-person visits to the bank and offer limited access to your account outside of normal business hours. Even though now most traditional savings accounts offer internet banking and mobile banking services, they need to be signed up for separately.

  • Debit card

With most online savings accounts, you get virtual debit cards that you can use for online and e-commerce transactions without having to carry a physical card wherever you go. This saves you valuable time and you don’t have to worry about misplacing or losing your debit card.

Traditional savings accounts come with physical debit cards that require yearly maintenance charges. While these cards can be useful in certain situations, virtual debit cards are more affordable and convenient.

  • Transactions costs

Online savings accounts offer almost all transactions like NEFT, RTGS, and UPI for free, making it easier to make multiple payments or transfers as per your requirement. Furthermore, most banks offer dedicated mobile banking apps that simplify online transactions even more. These apps allow customers to check their interest rates on savings accounts, invest, open fixed deposits, scan and pay, apply for loans, and more facilities.

This is not always the case with traditional savings accounts, where transactions can attract fees beyond a specified limit.

  • Customer service

Online savings accounts often offer speedy and efficient customer service. The ability to reach out via phone, email, or online chat helps customers get their questions and concerns addressed quickly. Plus, many banks have robust online resources and FAQ sections. These features help customers easily open a new bank account and manage their funds from any location without unnecessary complications.

Online savings account vs traditional savings account: The bottom line

Overall, online savings accounts offer convenience and 24x7 accessibility, while traditional savings accounts provide a physical presence, potential relationship benefits, and a more familiar banking experience. The right choice depends on your banking habits, individual preferences, and comfort level with digital platforms.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.