Everything You Should Know About Savings Deposits

In today’s uncertain times, it is crucial to have an emergency fund. And for that, you need to save and keep your hard-earned money safe. One of the most secure ways to do so is by opening a savings account in a bank. 

As the name suggests, the purpose of the account is to help you park your funds safely in one place. Savings accounts not only help you build your money but also offer additional benefits that enhance financial flexibility and security. 

To open a savings account, you are required to deposit an initial amount. You must also submit all KYC documents and a duly filled account opening form with your personal details. You can open the account individually or jointly with your spouse, family members, etc.   

Let’s discuss everything about savings accounts in detail below. 

What is a savings deposit?

A savings deposit is a bank account where you can start to save money and use it for future use. You can make deposits and withdrawals as per your convenience as well as attract good returns via interest. There are many kinds of savings accounts, this includes:

Basic savings account: 

If you want to save and aren’t concerned about the interest, then this is the right choice. It allows you to carry out day-to-day banking activities, be it online banking, transferring funds, booking FDs (fixed deposits), and more. 

Zero balance savings account: 

The main highlight of this savings account is that you can open one without any initial deposit. You are also not required to maintain a minimum monthly average balance to keep the account running. 

High-yielding savings account: 

This is suitable for those who want to earn better returns on their savings account, i.e., higher annual percentage yield (APY). Online banks usually offer such accounts to attract individuals seeking higher interest. To use the account, you should be comfortable operating it online via the website or mobile app. 

Money market savings account: 

A money market account (MMA) is a deposit account with variable interest rates that can change at any time. It is suitable if you want to earn higher interest rates without freezing funds. The higher the balance in your account, the more likely you are to earn higher interest rates. Therefore, it is highly beneficial for those with a substantial amount of funds in their account. 

Certificate of deposits (CD) account:

This type of savings account will pay you a fixed interest rate on a fixed amount of sum for a fixed period. The term lengths usually range from 3, 6, and 12 months to 4, 5, and 10 years. The interest rates of CDs are higher than that of regular savings accounts. However, you cannot withdraw your funds when you want. You can consider this option if you want a safer investment option than stocks and bonds.   

Specialty savings account: 

This savings account is designed to help you save money for specific financial goals. Whether you want to save money to buy your dream car, travel, get a child’s education, or retire, you can opt for this option. They come with withdrawal limitations, as the primary purpose of the account is to help you achieve your set financial goals. 

Benefits of savings accounts

Here are some of the advantages that a savings account holder can enjoy:

1. Interest: Depending on the type of account, you can enjoy returns from time to time. For instance, the interest on regular savings is calculated based on the daily balance and credited to your account quarterly. 

2. Insurance cover: Many banks also provide insurance coverage when opening a savings account . For instance you are provided with a personal accidental death cover, and air accident cover. There is also coverage provided on lost baggage, lost cards, and credit card purchases.    

3. Online banking: Most savings accounts can be operated online. This offers you the convenience and flexibility to transact online from anywhere, anytime. Whether you want to make bill payments or transfer funds to an international account, all is possible through mobile apps.  

Endnote

When considering opening a new savings account, take into account the interest rates, customer service, and additional features. Additionally, check if the online platforms work fine for easy access and account management. Go through online reviews to understand the customers’ experiences and satisfaction levels.