A savings account is a service provided by banks and financial institutions that allows you to keep your money safe. They offer interest on deposits and the ability to withdraw funds at any time. This way, by the end of the year, you’ll have a total of your deposited funds and earned interest in your account.
In this blog, we will learn about the characteristics of a savings account, its benefits and drawbacks, and how to open one.
What is a Savings Account?
A savings account is a type of bank account that allows users to deposit money with the bank and earn a fixed amount of interest on the amount deposited. Having a savings account allows users to avoid the risk of carrying cash with them while also allowing them to withdraw funds at any time.
A savings account has the following characteristics:
- Savings accounts are a type of liquid investment in that a user can withdraw funds from his or her bank account at any time
- Savings accounts have a daily/monthly transaction limit
- Users with a savings account can sign up for mobile and internet banking and take advantage of the various online services provided by banks
- Savings accounts have low interest rates when compared to most other options. The interest rate determines the amount paid by banks to depositors for keeping their money with them
- A savings account, unlike other bank accounts, does not allow for overdrafts
- Savings account holders receive an ATM/Debit card that they can use to withdraw money from ATMs and make payments at online and offline stores
- Users must keep a minimum balance in their savings account at all times (the minimum amount required may vary depending on banks). There is no such requirement to keep a minimum balance if you have a savings account with Paytm Payments Bank
Types of Savings Accounts
You can select one or more of the many savings account options described below-
|Type of Savings Account||Features|
|Regular Savings Account||Most common type of savings account|
A minimum account balance must be maintained
Appropriate for those who want to save money while earning interest on their deposits
Mobile banking can be used to manage the account
|Zero balance Savings Account||There is no requirement for a user to keep a minimum balance|
For making transactions, an ATM or a debit card is provided
|Salary Savings Account||Only for salaried professionals|
There is no requirement for a minimum balance
Net banking and mobile banking services are available
If no salary is credited to the account within three months, it automatically converts to a regular savings account
When converted into a regular savings account, a minimum balance is required
|Senior Citizen Savings Account||Only for senior citizens|
Decked with special privileges
Account holders benefit from higher interest rates
Pension funds can be linked together
|Children and Minor Savings Account||Only for children and their parents/guardians to save money for financial needs|
There is no minimum balance requirement
Functions similarly to a regular savings account
|Family Savings Account||Meant for the whole family|
Minimum balance required
Internet banking facility is available
|Women’s Savings Account||Specially made for women|
Charges lower processing fees on loans
Minimum balance requirement
Benefits of Savings Account
The following are some of the advantages of opening a savings account:
- A savings account provides liquidity, which means that users can withdraw their money at any time and from any location
- When you open a savings account, you receive a debit and ATM card that allows you to withdraw money from ATMs and conduct online and offline transactions. However, when you open a savings account with Paytm Payments Bank, you receive two benefits: you become eligible for a digital debit card and you have the option of obtaining a physical debit card by submitting a request
- You can earn interest on money deposited in your savings account, which can range between 4% and 7% depending on the bank
- Only a few banks provide international debit cards. enabling you to withdraw money from ATMs located outside of the country
- When you open a savings account, you gain access to internet banking, which means you can use it to transfer funds, make RD/FDs, request a cheque book, and so on via the official website or mobile application
- It is much easier to track all of your transactions and generate your bank statement when you use internet banking
- You can easily open a savings account by depositing the minimum amount and submitting the required documents. With Paytm Payments Bank, you need not deposit any minimum amount to open the savings account
It is important to note that each type of savings account has its own terms and conditions, which means that each type of savings account will have its own advantages and disadvantages. For example, suppose you have opened a regular savings account but you want benefits like a salary savings account (no minimum balance requirement). Now, since you don’t have a salary account, you won’t be able to avail such benefits.
Meanwhile, it is recommended that you compare different banks and their services before applying to open a savings account to reap the most benefits.
Disadvantages of Savings Account
With several benefits come minor disadvantages too. Explained below are some of the disadvantages of having a savings account-
- According to the bank’s terms and conditions, you must maintain a minimum balance in the account. The minimum balance requirement, on the other hand, may differ from one bank to the next. If you fail to keep a minimum balance, your bank may deduct money from your account as a penalty. However, Paytm Payments Bank provides users with a zero balance account, which means that users can spend freely without worrying about how much balance is left in their account. Even if the balance falls to zero, there is no penalty levied by Paytm Payments Bank
- Savings accounts pay lower interest rates than other available options
- With a savings account, the temptation to withdraw/use money at any time and from any location grows
How do Savings Accounts Work?
Savings accounts are easy and convenient to open and operate. Here’s all that you need to open a savings account-
- Form submission & verification– To open a savings account and for verification purposes, users must submit an application form along with the required documents to the bank
- Application status & account details– Following the verification of your documents, the bank notifies users of the status of their application and the details of their new savings account
- Deposit amount– Users must deposit at least the minimum amount required in their savings account after successfully opening the account. However, Paytm Payments Bank provides users with a zero balance account, which means that users can spend freely without worrying about how much balance is left in their account. Even if the balance falls to zero, there is no penalty levied by Paytm Payments Bank.
- Interest paid– Your bank will pay interest on the deposited amount at regular intervals over time
Banks accept money from customers and deposit it in their savings accounts. A portion of this sum is kept in reserve for users in the event of an emergency. The remainder, on the other hand, is used by the bank to make loans to other customers. The interest earned by the bank from the borrowers is paid to the holders of savings accounts as interest on the amount deposited. This is how the banking cycle of lending and depositing money works. Banks charge borrowers interest and pay interest to account holders who have accounts with them.
Furthermore, you can continue to deposit funds into your account using a variety of methods, including-
- Net banking
- Direct deposit
- Using mobile banking application
- Transfer of money from one account to another
Now that you understand how savings accounts work, here is a step-by-step guide to open a savings account.
How to Open a Savings Account?
There are two ways to open a savings account: online and offline. You can open a savings account online using net banking or a mobile banking application, whereas you must visit your bank’s branch to open a savings account offline.
Before you begin the process of opening a savings account, you should first research the type of account you want to open and decide which bank you want to open your account with. To do so, you must compare the features, benefits, and drawbacks of each type of savings account offered by the selected banks.
Once you’ve decided on the type of bank account you want to open, you should check the bank’s official website to see if it offers online banking. If it does, you can open online savings account by following these steps:
- Log in to the bank’s website or mobile application
- Open a savings account by clicking on the ‘open savings account’ button
- Fill out all of the information and submit all of the required documents
- Enter the amount you want to deposit into your savings account as the first (minimum) deposit
- Submit your photograph and digital signature
- Check the account opening form again carefully
- Submit your application along with the required documents
- Within 7 to 15 business days, you will receive an acknowledgement mail or message indicating the status of the verification process
- After successful verification, you will receive all of your banking credentials, as well as your passbook and Debit/ATM card (if applicable)
If your bank does not support internet banking, you can open a bank account offline by following the steps below:
- Visit the bank to connect with the concerned official for opening a savings account
- Fill out the account opening form and submit all required KYC documents
- Following successful verification of all your documents, you will receive a confirmation email or message from the bank, along with your banking credentials
How to Open a Savings Account with Paytm?
Paytm Payments Bank, like many other banks in the country, provides the option of opening a savings account. However, the benefits provided by Paytm Payments Bank may differ significantly from those provided by other banks. The process of opening a savings account with Paytm Payments Bank is simple and entirely digital. All you have to do is follow the simple steps outlined below-
- Log in to the Paytm mobile app and select ‘Paytm Bank’
- Select ‘Open Savings Account’
- Set a ‘Passcode’ and enter it again to confirm it
- Fill in the nominee’s information
- Click ‘Proceed’ to continue
- Your savings account will be created
*During the account opening process, you will be asked to complete your KYC. Choose between a Paytm Payments Bank KYC video call, a home visit, or a visit to your nearest KYC point.
Points to be Considered Before Opening a Savings Account
Regardless of whether you open your savings account online or offline, keep the following points in mind:
- Compare the various banks based on-
- Services provided
- Checking fees
- Interest rates offered
- Additional benefits offered
- Minimum deposit amount
- Find out if you are eligible to open a savings account
- Keep your KYC documents handy & your minimum deposit funds ready
Benefits of opening savings account with Paytm Payments Bank Limited
1. Zero balance account – No minimum balance that needs to be maintained in the account. Even if it falls to zero, there are no penalties associated with it
2. Zero account opening fees – All the convenience of banking with no hidden fees
3. Zero hassle payments – Most seamless way to pay whether online or in-store, just a click and it’s done
4. Zero money transfer charges – Send Money or Accept Money from any Paytm User at no charge at all
5. Zero paperwork – Paperless documentation for a complete digital experience
6. Zero FD breakage charges – Super liquid FD which can be used for payments without any penalty charges
7. Zero deposit risks – Your money is safe with us. We invest deposits only in government bonds. None of your deposits will be converted into risky assets. All transactions are backed by a highly secure infrastructure and two-factor authentication.
8. Zero expiry – Lifetime free account with free virtual debit card
9. Zero time restrictions – Enjoy banking 24×7 at your convenience. Bank anywhere, pay everywhere.
Documents Required to open a Savings Account
As you proceed to open a savings account, take a closer look at this checklist for the documents required for opening a savings account-
- Identification proof – Aadhar Card, Voter ID card, Passport, etc.
- Address Proof- Passport, Driving License, Aadhar card, Ration card, Utility bills etc.
- PAN card
- Passport size photographs
- By depositing cheque
- Transferring funds from one bank account to another
- Net banking
- Using e-wallet
- Direct deposit by visiting the bank