What is a savings account? Definition, Process, and Benefits Explained!
  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors
  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors

Taking control of your financial future is a journey for which having access to the right information and products can make all the difference. A savings account can be the first and most important decision you can make to manage your personal finances and long-term goals.

Whether you are saving for a rainy day, preparing for a big purchase, or investing money over the long term, having an easily accessible savings account can help simplify the process. With that being said, here's more about what defines a savings account, the processes involved in opening one, and the benefits it offers.

Understanding a savings account and its advantages

A savings account is one of the basic financial accounts that you can open at any financial institution. Designed to help you save money, a savings account allows you to deposit funds and earn interest on that balance over time. Having a savings account can offer various advantages, such as -

  • Safe avenue for funds

All savings accounts in India are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), up to Rs 5 lakhs (principal + interest).

  • Provides special value-added services

Beyond basic banking services such as passbook facility, auto sweep facility, net banking, chequebook, ATM facility, etc., many financial institutions offer special value-added services on their savings account. These can include accident, medical, or foreign travel insurance.

  • Gives you a steady interest

A savings account also earns interest on the funds deposited, which can potentially add up over time and improve your overall financial well-being. Note that the bank savings account interest rate you are offered can differ depending on the size of deposits and the rate offered by your selected institution.

  • Different types of savings accounts available

Most financial institutions offer different saving account types to meet the needs of different individuals and their requirements. They include but are not limited to:

  • Regular savings accounts
  • Zero balance savings accounts
  • Women's savings accounts
  • Kids savings accounts
  • Family savings accounts
  • Senior citizens' savings accounts
  • Salary account

Each savings account comes with different benefits and unique features, thus helping you meet various goals and objectives.

  • Inculcates financial discipline

By keeping money in a savings account, you are actively making a choice to spend your funds or set it aside for future use. And with the ability to quickly transfer funds, automate bill payments, earning interest, a savings account could further help you develop better financial strategies.

Process of opening an online savings account

Most banks like Kotak offer easy online applications that allow you to quickly open savings accounts without requiring extensive paperwork or visits to a physical location. Here is how to open a bank account online instantly with Kotak:

  • Visit their website
  • Click on Open Online option provided in the tab of Savings account of your choice
  • Complete the form with personal details
  • Provide your phone number to receive the OTP
  • Fill in your PAN and Aadhaar details
  • Once done, verify your details, and complete the funding
  • Post funding, your limited KYC account after which you may be required to undergo video KYC verification. Keep your KYC documents and address/identity proof ready
  • An official representative from the bank will carry out the video KYC process. Post verification, your account will be converted to a Full KYC account and you will receive the account details in your email.

Final words

Having a savings account is an essential step toward cultivating long-term financial stability and security. However, the key is having enough knowledge about what constitutes the right savings account for you. Whether it is earning a higher interest rate, saving for a big vacation, bringing financial discipline, or setting up an emergency fund, research your options thoroughly and ensure that the chosen savings account can meet your expectations.

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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.