Using savings account just for keeping money? 10 facts you shouldn't miss

Savings Account Facts: In today's era, almost everyone has a savings account where they keep their money. Many people think these accounts are just for safeguarding funds, but there's much more to them. Here are 10 important things about savings accounts that everyone should know.

1. Secure Storage for Money

A savings account allows you to store your money safely and access it whenever needed. Keeping money at home poses the risk of theft or loss, while a bank takes on the responsibility of safeguarding your funds.

2. Facilitate Transactions

You can send and receive money through your savings account. This means you don't need to withdraw cash to pay someone; you can transfer the money online, making transactions convenient and efficient.

3. Bill Payments

You can pay various bills directly from your savings account via net banking, debit card, UPI, or cheque. This includes house rent, utilities, internet, and mobile bills, as well as payments for purchases.

4. Expense Tracking

Your savings account statement provides a detailed record of all transactions, helping you monitor your spending and plan future expenses effectively.

5. Minimum Balance Requirement

Most savings accounts require maintaining a minimum balance, failing which the bank may charge a fee. The required balance varies by bank and is typically calculated on a monthly basis.

6. Minimum Balance Calculation

The minimum balance is calculated based on the average balance throughout the month, not daily. For example, if you maintain a balance of Rs 10,000 most days and deposit Rs 300,000 for one day, your monthly average balance will still be Rs 10,000.

7. Earn Interest

Savings accounts accrue interest on your balance, usually around 3-4 per cent. While this interest is modest, it is a benefit over keeping your money at home.

8. Fixed Deposits (FDs)

If you plan to keep money in your savings account for a long time, consider investing in a fixed deposit (FD) to earn higher interest. However, withdrawing the FD before its maturity may incur a penalty.

9. Taxable Interest

The interest earned on your savings account is subject to tax, with the rate depending on your tax bracket. It’s important to remember that this interest is not entirely tax-free.

10. Tax Exemption on Interest

Under Section 80TTA, interest earned up to Rs 10,000 from a savings account is tax-exempt. You only pay tax on interest exceeding this amount, providing some relief for small savers.