What is a saving account?

Saving bank account encourages us to save money and earn some interest on it rather than keeping it in our cupboards at home where it just lies idle. Everyone should have a saving bank account regardless of their income or residential status. Parents/Guardians should open a saving bank account for their children (minors) so that they understand the value of money from a young age.

The interest offered is different from different banks. Most banks offer interest rates around 3-4%, interest rates in some banks can also be as high as 6-7% but you need to maintain a higher minimum balance.

Anyone can open saving account in Public banks, Private banks or Co-operative Banks. The minimum balance to be maintained varies from bank to bank. It is less in case of public banks and higher in case of private banks. Penalty is charged for non-maintenance of minimum balance.

Features of a saving bank account

Offers and discounts:
It offers discount on locker fees if you maintain a high minimum balance in your account. Some banks also offer free accident policy if you open saving bank account with them
ATM facility:
ATM facility is provided by all banks to withdraw cash at any time. You can visit ATM machines whose branches are in your vicinity.
Payment facilities:
Most banks provide you with debit and credit card, which you can use for your payments both online and offline.
Online and phone banking:
You can transfer funds easily to another individual using NEFT/RTGS/IMPS. It helps you to check your balance as well automate all your bill payments.
Zero balance account:
In recent times, banks have also been offering Zero balance saving account which does not require you to maintain any minimum balance.
What are the tax deductions?
Section 80TTA of the Income Tax Act, 1961 provides a deduction up to Rs 10,000 in respect of interest income earned on savings account. This deduction is available to Individuals and Hindu Undivided Families (HUFs). Further, for senior citizens, the exemption for interest income earned on deposits with banks and post offices is Rs 50,000.