If you plan to save funds for future stability and goals, turn towards a savings account.
A savings account allows you to set money aside for safekeeping and earn interest. You can open these accounts with a bank, credit union or brokerage firm.
If you're seriously considering them, it's essential to understand what savings accounts are and how they work.
A savings account, by definition, is a deposit account designed to hold the money you intend to save. You don't need much money for opening a zero-balance savings account online.
However, the Reserve Bank of India has set a savings account limit on cash deposits in these accounts. You can deposit INR 1,00,000 lakh cash only once in the account. Cash deposits in the savings account cannot be more than INR 10,00,000 lakhs in the financial year.
While these accounts generally have a moderate interest rate, their reliability and safety make them an excellent choice for parking cash that you want to be easily accessible. For instance, you can open a savings account for short-term emergencies and even long-term needs, such as stashing away money for a down payment for a house.
Savings accounts are one of your most liquid investments; you can easily withdraw money from your account anytime, anywhere.
Savings accounts, alongside other deposit accounts, are an essential source of funds that financial institutions such as banks or credit unions use for loans. The bank takes money from you (and pays you interest) and loans it to another individual (and charges them with interest).
Typically, savings account interest rates would vary from bank to bank. Except for promotions that promise a fixed rate up to a certain period, banks and credit unions might elevate or decrease their interest rate at any time.
Also, note that the more competitive the cost, the more chances of fluctuation over time. Changes in the federal fund's cost might also lead financial institutions to change their deposit cost. So, understanding the terms and conditions of your specific savings account is essential to ensure you enjoy the best interest rates on your savings.
If you're interested in opening a savings account, Fi Money offers a zero-balance savings account in partnership with Federal Bank. You can easily open your account and enjoy perks such as a VISA platinum Debit Card, higher interest, and even invest in Mutual Funds!
1. Can savings accounts help customers build long-term wealth and financial stability?
Having a savings account is a safe and secure place to keep the money that you don't wish to spend right away. These accounts contribute immensely to your financial well-being and stability by providing funds for unexpected situations, major purchases, and long-term goals.
2. What role do savings accounts play in the overall financial planning of an individual?
A savings account is an ideal way to store some money in a safe place where you can also earn interest. It allows you to put some space between your daily spending and savings. As such, with a savings account, you can plan your finances in a better way for a sound future.
3. How do savings accounts differ from other deposit accounts, such as checking and money market accounts?
Both money market accounts and savings accounts enable you to deposit money and earn interest. However, unlike savings accounts, money market ones often come with certain transactional features – such as the ability to make limited bill payments each month or check payments.
4. Are there any savings accounts offering unique features or benefits compared to traditional ones?
High-yield savings accounts provide higher interest rates than traditional ones, so it is a better option than traditional savings accounts. A money market account is also a type of savings account that enables you to access more funds with limited transaction fees.
