A bank account is a virtual vault created by the bank on the request of an individual, in which the latter can safely and securely store a virtual representation of his / her real wealth.
Broadly speaking, there are a few major types of accounts that individuals can maintain with banks:
• Savings Account.
• Current Account.
• Recurring Deposit Account.
• Fixed Deposit Account.
Below is a list of some of the categories of savings accounts that are available from most banks:
• Regular Savings Account: These are opened on the bank’s most basic terms and conditions. These accounts don’t see regular deposits of consistent amounts, nor do they see regular withdrawals. These are primarily the virtual equivalent of a safe where the money just sits waiting to be used by the account holder. These facilitate the most ../../common form of virtual savings that aren’t touched, unless absolutely necessary.
• Salary Based Savings Account: These most often opened by banks on the request of large companies that require a payment disbursal solution. Banks offer companies preferential rates and specific terms for these accounts – which will be individually handled by each of the latter’s employees. At the date of payment disbursal, the bank withdraws from the company account and disburses the required amount among the salary based savings accounts opened by employees. Generally, accounts that have regular deposits of consistent sums of money are viewed favourably by credit rating agencies. It should be noted that most salary accounts do not have a minimum balance requirement, but once the salary stops being credited (for whatever reason) for 3 consecutive months, these accounts are changed into regular savings accounts with a minimum balance requirement.
• Savings Accounts for Senior Citizens: These accounts are created for senior citizens, with specific functionality and benefits for those in the senior citizen category. These function in the same way that regular savings accounts do, but generally offer higher rates of interest and exclusive banking privileges. They can be linked to other senior citizen savings schemes to remit the funds from retirement accounts or pension funds to consolidate all the funds under one single bank account – easily manageable by seniors.
• Savings Accounts for Children and Minors: These accounts don’t generally have a minimum balance requirement and function in the same basic way as regular savings accounts. These are designed to educate the younger generation about modern day banking, facilities, and the general nuances of dealing with a savings account in a bank. These accounts are opened for minors and children by their parents or legal guardians, who supervise their use. This has been a successful step in encouraging the younger generation to save money and giving them a higher sense of responsibility when dealing with money.
In order to set up and operate a savings bank account from any of the major banks in India, applicants must meet the following eligibility criteria. Please note that this is a list of general requirements and criteria followed by most banks, but your specific bank may ask you for a more authentication or have different parameters:
• Savings bank accounts can be opened by resident Indians, non-resident Indians (NRIs), and foreign nationals.
• Age: Generally, banks allow only those who are 18+ to open an account on their own. However, savings accounts can be opened for minors by their parents / guardians.
• Restrictions: Unlike other banking or financial products, there are almost no restrictions on who can open a savings bank account.
APY refers to how much interest you earn on a deposit during a year, taking into account the effect of compounding interest. This is different from the interest rate, which does not take compounding into account. The higher the APY, the more you can expect to earn on your deposit. But make sure the APY you've been quoted doesn't come with other conditions, like fees or other requirements that don’t work for you. Some banks offer introductory APYs that seem attractive until you notice that they won't stay competitive for long. Online banks tend to offer more competitive APYs than traditional brick-and-mortar banks.
Compound interest is interest that's paid on both the initial deposit and also on any interest earned. The more frequently interest compounds on an account, the faster your balance grows.
Usually, savings accounts are considered low-risk, but you want to be sure any account you consider is at an FDIC-member bank. Deposits in FDIC-member banks are insured by the Federal Deposit Insurance Corporation up to the maximum amount allowed by law.
Reliable and helpful customer service and an easy-to-use website are important factors in choosing the best savings account. You’ll want to be able to quickly find out information on bank products and have convenient access to your account.