Major purpose of bank accounts like savings account is to park funds in a safe place and earn interest from it, instead of accumulating it at home. Openingabasic savings bank account or any other type of savings’ account can get you access to distinct investment avenues. For many, this is often the first point of contact with the financial and banking system owing to its capital protection and high liquidity features. Besides being a safe parking avenue, savings accounts also can be used for various purposes.
Checkout 5 lesser-known facts about savings bank accounts that you must be aware about.
- Ease of investment in different instruments
Investment such as SIP (Systematic Investment Plan) or recurring deposit (RD) can be started with a savings account. Moreover, if you look for investing in securities, you also can open a demat and trading account through your savings account. Also, with a savings account, you can make investments in FD or fixed deposit through the sweep in facility, PPF (public provident fund), insurance and various other instruments via internet banking.
- Setting standing instructions for bills
With technological advancement, a higher number of benefits are added to your savings account. One of the major benefits is the ease in cash management by setting up standing instructions for all your payments. You can set standing instructions for most of your bills and dues like loan EMIs, credit card outstanding, insurance premium, utility bill payment etc., through internet banking.
- Provision of linking account with UPI apps for easy payments
You also can link your savings account to payment applications like GooglePay, Paytm, PhonePe and BHIM, which supports the UPI transactions for making instant payments.
- Additional benefits
On maintaining a good banking relationship, you can avail various banking benefits in the form of pre-approved loans, preferential interest rate on loans, overdraft facilities, credit card with higher limits, higher discounts, reward points, cash back, waiver on loan’s processing fee and various other offerings.
Few savings accounts also come with locker benefits wherein you can receive up to 30 percent discount on annual locker charges. Provision of free of cost international debit cards is also one of the crucial benefits provided by most of the banks. International debit cards mean you can use the card outside India also. However, ensure that there are generally few charges attached with using this card overseas. Such charges include ATM usage fees and currency markup fees of up to 3.5 percent of the transaction value for offline and online international transactions.
- Tax benefit
The interest generated on savings accounts is tax free for up to Rs 10,000 as per Section 80TTA of the IT Act. However, the additional interest on savings accounts is taxable if interest earned from such sources surpasses Rs 10,000.
For many, a savings bank account marks the first point of contact with a bank. Until a few years back, savings accounts could only be opened if the current bank customer endorsed your application. Today,banks are open to welcome you with minimal documentation. It is because the competition and benefits within the banking sector has enhanced, which endows you with better financial handling.