Saving account is a deposit account that can be opened by an individual customer in a retail bank or financial institution. Hence, the purpose of this account is to hold the cash on safe place. Also, this account is preferable to get a return in terms of interest in his/her deposit balance amount.
People usually open a savings account to set aside money for future needs and emergencies, not for daily expenses. That's why, a saving account is less accessible than a checking account. (in which transaction is allowed without restrictions).
This account type provides the low-cost fund to invest in profitable sectors. So, from bank's or financial institution's perspective also, saving account is the focused source of fund to them.
A savings account fosters a saving habit, securing money for emergencies and offering a nominal return. Therefore, individuals with stable and regular incomes commonly open it.
Target group for this account are children, senior citizens, salaried people as well as the retired pension holders etc.
How Saving Account Is Operated?
- To open a savings account, you may need to maintain a minimum balance on a daily or monthly basis. Saving account with high minimum balance generally offers a better rate of return than low minimum balance or with no minimum balance account.
- You can open this type of account either online or by visiting the bank in person. Customers of all age group can open and operate this account.
- To open this account, you basically need to provide customer identification and either a social security number or a tax identification number.
- The account might offer unlimited deposit and withdrawal options. But, it could also have limits on the number of transactions within a specific period. These limits depend on the bank's product offerings, prevailing banking trends, and the rules set by regulatory bodies. 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 a savings account is not meant for spending, it often does not provide checks for transactions in most cases. But one can do the transaction through checking account if the transaction counts more often.
- After opening a savings account, the bank generally provides a bank card.
- The bank typically pays interest on the daily balance or the average balance monthly, quarterly, semi-annually, or annually.
- You can conduct transactions on a savings account by using a check, accessing the bank's website on a computer, using mobile apps, or utilizing a bank card and debit card. Some bank charge fee for the use of bank card and some make it free for transactions.
- Nowadays, the transactions on such accounts are frequently recorded electronically and can be accessed online.
- Standing instructions or automatic transfer from checking account (which allows transactions) can be set up for your deposit transaction in this account.
- You can make withdrawal transactions over the counter with a teller, through Automated Teller Machines (ATMs), or even online.
- Debit and credit card and online banking services are also available in this type of accounts.
- Many countries mandate deposit insurance protection for savings accounts, and some countries guarantee a portion of the account balance through government assurances.
- Saving accounts often serve as the hub for various services offered by banks and financial institutions i. e. SMS banking, mobile banking, e-banking, locker services, utility bill payments, EMI payment, electronic fund transfer, online banking services, standing instructions, and so on.
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