Why a Savings Account is an essential financial tool

3 MinsSept 7, 2021

For most of us, a Savings Account is the first formal relationship with a bank. Whether you want to apply for a personal loan or credit card or whether you want to invest in mutual funds or buy an insurance plan, you need a savings bank account for carrying out the transactions. While transacting may be the primary function of a savings account, it also has several other benefits. Let us see what these are:

benefits of savings account


1.  Introduction to real-world finance: A savings account is often the first interaction an individual has with the financial and banking system. It is a multipurpose account. First, it is a safe place to park your funds. Second, it helps you organise your finances. There are several types of savings accounts. They vary based on the minimum balance required, features such as the number of free cash transactions, cheque book facilities, discounts and offers among other things.

2.  Earns money for you: Most savings accounts offer interest rates of around 3%. This means your money is making money for you even when you are sleeping. Some savings accounts offer as much as 6% interest, provided you maintain a higher balance in the account. Besides, interest earned on a savings account is exempt from income tax up to a maximum of Rs 10,000 in a year.

3.  Debit Cards: Most savings account come with a debit card which you can use for shopping, whether online or offline. This means you won’t need to carry cash with you at all times. Banks also offer discounts on select brands and cashback offers on debit card purchases, which you will not get if you pay in cash.

4.  High liquidity: There is no lock-in period for the money in your savings account. You can withdraw your money from a savings account at any time. You do it via an ATM or by cheque at a bank branch.

5.  Digital services: The government’s push for digital payments mandates the use of a bank account. You can access UPI-based apps, mobile and net banking through a savings account. If you want to shop online, you can do it using these digital services. The focus on digital transactions will only increase going ahead as they are faster and easier.

6.  Value-added services: In addition to debit card discounts and cashback, banks also offer services such as net banking, chequebook and passbook with a savings account. Some accounts also offer insurance policies depending on the customer segment.

[Also Read: How To Determine Which Savings Account Is Right For You]

7.  Money is safe: There is a chance that your cash might get lost or stolen if you carry it with you. However, a savings account is insured for up to Rs 5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

8.  A place to receive funds: Apart from making payments, a savings account is a great option to receive funds from third parties. There are no limits on the number of cheques deposited or issued or the number of payments made to and from a savings account. This ensures that you have a hassle-free experience on owning as well as operating a savings account.

9.  Emergency fund: A savings account is an ideal place for you to store your emergency fund. It inculcates the habit of saving. These funds serve as a backup in case you require cash for unforeseen expenses like medical expenses. You'd want your emergency fund to be in an account with immediate access so that there are no penalties and you can get your money out whenever you require it.

Axis Banks offers an array of Savings Bank accounts, each of which comes with benefits tailored for its various categories of customers. To know more, click here.

What's more, now might be the best time to open your Savings Account! In addition to a host of existing benefits, Axis Bank is offering a flat 10-15%* cashback on Amazon.in and Flipkart shopping to every new ASAP Digital Savings Accounts opened between the 6th of September and 6th of December 2021. So don't delay any further, start the journey to maximizing your savings today! Click here to know more.

Disclaimer: The Source, a content creation and curation firm has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.