What is Saving Account? Saving Account Definition.

Saving account is a deposit account that can be opened by an individual customer in a bank or financial institution to get a return in terms of interest in his/her deposit balance amount. Saving account is basically opened with the aim to save the money for the future requirement and emergency but not for the daily expenses. That is why a saving account is less accessible than checking account (in which transaction is allowed without restrictions). From bank’s or financial institution’s perspective also, saving account is the focused source of fund to them since this account type provides them the low-cost fund to invest in profitable sectors.

Basically saving account helps to develop and promote saving habit in individuals and secure their money for the emergencies with providing a nominal return on their money. Saving account is generally opened by people having fixed regular income. Banks and financial institutions’ target group for this type of account are children, senior citizens, salaried people and retired pension holders etc.

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How Saving Account is operated?

  • Saving account can be opened with a certain amount of minimum balance to be maintained daily or monthly in an account. Saving account with high minimum balance generally offers a better rate of return than low minimum balance or with no minimum balance account.

  • This account type can be opened online or by visiting the bank physically. Customers of all age group can open and operate this account.

  • Basically, customer’s identification and a social security number or tax identification number are required to open this account.

  • It may be featured with unlimited deposit and withdrawal facility or limited with the number of transactions per period i.e. deposits and withdrawals limits depend upon the individual bank’s or financial institution’s product schemes and services, the current trend of banking services as well as regulatory body’s rules and regulations. But in most cases, there is no limit on the number of deposits in a saving account. But withdrawals are subject to some restrictions.

  • Saving account has no maturity period of holding like in term or fixed deposit account.

  • Since saving account is not intended for making expenses, so very often, checks are not provided for doing the transaction in most of the cases. But one can do the transaction through checking account if the transaction counts more often.

  • Generally, Bank Card is provided after opening saving account.

  • Interest is generally paid on daily balance or average balance monthly, quarterly, six monthly or even annually.

  • The transaction can be done on saving account by check, through a computer by using bank’s website, through mobile apps or by using a bank card and debit card. Some bank charge fee for the use of bank card and some make it free for transactions.

  • Standing instructions or automatic transfer from checking account (which allows transactions) can be set up for your deposit transaction in this account.

  • Withdrawal transaction can be done over the counter teller, through Automated Teller Machines or even through online.

  • Debit and credit card and online banking services are also available in this type of accounts.

  • A Certain amount of deposit in saving account is secured by deposit insurance. So saving account is considered to be safer and secure to the customer.

  • Other services of banks and financial institutions are often tied up and routed through saving account i.e. SMS banking, mobile banking, e-banking, locker services, utility bill payments, EMI payment, electronic fund transfer, online banking services, standing instructions etc.

Now that you find out what does saving account means, so if you want to share something more about saving account, then please feel free to use our comment section as below.

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