14th Jun2013

What Is A Savings Account And Types Of Savings Accounts?

by Ucoly.com

Savings accounts are one if the ideal ways to save money. Interest rates on savings accounts have to be high so that you can have a sturdy income. In this world, saving money for future is an important and most essential task to be done at an earlier stage when you are earning well. We cannot predict as to when recession occurs. We cannot wait until a bad time occurs. We have to be well prepared even if disaster like that happens. Many different types of savings accounts are available but you need to pick the right one that suits our needs. This article explains clearly about what is a saving account, its types and the interest rate of saving account.

What is a savings account?

 types of savings accounts

  • Retail financial institutions maintain an account known as savings account were an interest is paid and it cannot be used as money directly in medium of exchange.
  • Savings account make customer in earning monetary return by keeping their liquid assets aside. Interest will be paid for the cash lent out by the bank.
  • Local bank savings account is most traditional way in saving out money. Passbook and statement are two different savings account types and most of the banks offer either passbook or statement account.
  • Only low balance is required to open an account in saving account.

Important data to be checked on identification of interest rate

The data to be used for identification of higher interest rates are as follows

  • Check the terms:  Saving account interest rates offered by some bank will be better. But due to terms the interest rate will also goes down. Before signing up of any document we must check the terms that are used for investment.
  • Compare the rates: Interest rate offered by bank will be in APY and APR. Before making any investment we have to compare and check the interest rates of both APR and APYS.
  • Value Added Services: Value added services offered by various banks should be considered.
  • Bonus rates: Bonus rates are also offered by some bank for opening an account. We have to check whether we will receive any benefits from this bonus rates.
  • Customer service and hidden charges also must be considered on opening savings account.
    • Saving account interest rates is not only to be considered as a factor on saving accounts opening.  Best rates will also helps in setting up reputation of financial institutions along with policies of accounts and reasonable services.
    • On keeping the freedom for withdrawal of the money at any time will help account holders to earn a lot in high interest rate savings account than the other investments that helps people in earning higher return for the committed funds.

Following are the different types of savings accounts:

1. Normal saving account: No special features are available for these accounts. Maintenance of daily minimum balance or average balance in per quarter can be used for operating this account. Daily balance required for government bank is 1000 and average balance that for private bank is 500 per quarter.

2. No frills account: This account is mainly a zero balance accounts which usually for people from deprived classes. Rules and regulations required for this accounts is highly large. No frills accounts are offered only by the institutions like HDFC, Axis and corporation bank.

3. Salary account: Salary of an employee will be deposited in this account types. Balance of it will be zero. Overdraft facility is also available in this account, in which it is calculated by remembering amount of salary drawn.

4. Pension account: This is also a zero balance in which pension amount will be deposited. Pension account with zero balance is offered by Axis bank.

5. Woman’s account: Special account or specific demands for women will be kept in mind by institutions like Axis and the corporation bank.

6. Child account: This account in nature is of zero balance. It is mainly structured in a view to have saving habits for our growing children.

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