What is a Savings Account?

There is a very popular children’s story about an ant and a grasshopper. The story starts on a bright and warm sunny day with the grasshopper making fun of the ant who is trying to collect and store food to survive the harsh winters. The grasshopper spends the entire summer dancing and singing without saving a morsel for the winters, while the ant does the exact opposite. As winter sets in, the grasshopper bears the brunt of having no food. The ant who saved enough food faces no issue, while the grasshopper was left to fend for itself.

You must be wondering why this story, one of Aesop’s fables, has to do with a savings account. It’s because this story paints a picture on the importance of creating a regular habit of savings. It also focuses on how important savings can be for the unforeseen future and why you need to stay prepared.

A savings account is a deposit account that is curated to hold funds you might not need or plan to spend in the near future. This allows you to write checks or make purchases and ATM fund withdrawals using a tailor-made debit card. A savings account offers flexibility, liquidity and helps you build an emergency fund.

How Does a Savings Account Work?
A savings account works by opening and adding money to the account. The bank or financial institution pays you interest on the deposited money as they use the funds to offer loans to other people. So, if you wish to park your surplus funds or save for a short-term goal, then opening a savings account with your bank can be a great option for you.

What Factors Should You Consider before Opening a Savings Account?
A savings account offers a host of benefits and features. Here are 5 factors to look for if you are searching for the best possible savings account:

• Minimum Balance – There are various types of savings accounts available, which may or may not require you to always maintain a minimum balance. You can opt for a hassle-free zero balance savings account which requires no minimum balance.
• Interest Rate - Banks offer interest to the depositors for storing funds in a savings account. You will be eligible to earn an interest rate, depending on the prevailing rates, every month or quarter. The interest that is earned is deposited into the savings account, helping you earn more while keeping your funds safe.
• Minimum Deposit Requirement - Banks might require you to deposit a certain amount while opening a savings account.
• Services Offered - Banks provide debit cards, net banking facilities, mobile banking options, etc.
• Facility of ATMs Easy Withdrawal- Banks offer ATM facilities, so you can withdraw cash with ease. There might be a maximum withdrawal limit for a day and some banks may even charge you for the transaction. Do check with your bank for the applicable terms and conditions.

How to reap maximum benefits from your Savings Account?
While the basic function of a savings bank account is to help you park your savings and earn interest on that amount, there are other features as well that this account can offer. For some people, a savings bank account can be their first interaction with the banking and finance sector.

With a savings account, you can easily access online banking facilities, get debit/credit cards, etc. However, you must be careful while operating this account and transacting online. Below are a few do’s and don’ts that you need to be aware of so that you can enjoy a smooth and safe banking experience.

The Do’s

• Make sure that you keep your passbooks, checkbooks and ATM cards in a safe place.
• Always keep your passbook updated.
• Make sure that your latest mobile number and email id are registered with the bank.
• Secure your account by keeping the password safe. You also need to change the passwords of your debit/credit card or bank applications at regular intervals.
• Access only secure and legitimate websites while making online transactions.

The Don’ts

• Never share sensitive information such as your debit/credit card number, CVV, UPI pin, etc., over call or SMS. Banks will never ask their customers to share any sensitive data.
• Websites that are secure begin with https://. Do not use your card for transactions on websites that start with http://.
• Refrain from giving access to any application that can remotely control your smartphone or computer.
• Never click on any link from unknown sources.
• Avoid using net banking services on shared computers.
• Do not save your passwords on your mobile or other places which can be accessed by others.

How to add funds to your savings account?
If you wish to add funds to your savings account, there are several ways to do so. One of the traditional ways to deposit funds into a savings account is by filling out a deposit slip and submitting the same, along with the cash, to the bank teller. You can also deposit the cash to your account via your bank’s Cash Deposit Machine (CDM). If you have a check issued in your name, you can go to your bank and deposit the same.

Other than the above-mentioned ways, you can also add funds to your savings account through a few other methods, such as transferring the amount through Internet banking (NEFT, RTGS, IMPS, etc.), initiating an online payment through UPI, etc.

How to access money from your savings account?
The dawn of the digital era has transformed the banking segment. For instance, one can now complete all transactions from anywhere even with smartphones. Banks now offer Instant money transfer services (Internet banking services) that are available 24/7. It includes RTGS, NEFT, UPI, etc. If you need to withdraw cash, you can either visit a nearby bank or withdraw money from your bank’s ATM. You can also withdraw cash from a bank using a check leaf. With a savings account, you can easily avail these banking services and enjoy a safe banking experience.

Opening a savings account is a great way to save money and ensure liquidity in times of contingencies. Start your savings journey with Kotak today.

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