Whether facing an emergency or aiming to save for the future, you cannot ignore the importance of savings. The COVID pandemic has taught us that life is full of uncertainties. You can never be sure what the future has in store. But one thing you can do is build enough savings to tackle tough times easily. When considering the importance of savings, you need to know where and how to save your money.
You can always open a Savings Account to park or deposit your money safely with a bank. You receive interest on the amount kept in it. Here are reasons why opening one is important:
- A safe place for funds
A Savings Account is a safe place to store money, offering easy access whenever needed. While it usually earns a lower interest rate than other market-linked instruments, its liquidity allows for limited monthly withdrawals.
- Interest-earning account
Unlike Current Accounts, Savings Accounts earn interest on the balance, helping you boost your income. Some banks offer high interest rates to customers who maintain larger balances. Others may provide a sweep-in facility, which automatically transfers the excess funds to a Fixed Deposit to earn a higher interest.
- Low-risk option
You invest to maximise gains with some risk. A Savings Account is a low-risk investment option offering guaranteed profits. Unlike market-linked investments, you receive a steady interest without worrying about fluctuations. Simply deposit funds or make regular contributions and watch your money grow steadily and securely over time.
- Tax benefits
Interest earned from any investment is generally taxable, and Zero-Balance Accounts are no exception. The interest adds to your ‘Income from Other Sources’ and is taxed depending on your income slab. Under the Income Tax Act’s (1961) Section 80TTA, you can claim up to Rs. 10,000 on interest income exemptions. Only the interest above this amount is taxed annually. This account is a beneficial option if you seek a tax break.
- Reduces financial stress
Financial stress can profoundly impact one’s overall well-being. Keeping maximum money in your Savings Account can significantly reduce stress and help you make confident decisions.
Benefits of Savings Accounts
A Savings Account provides customers with a host of advantages, offering liquidity and ensuring the safety of funds. Fund transfers are quick, convenient, and straightforward. You can also open them jointly. There is a lower minimum account balance and no caps on deposits. You should use intuitive platforms when opening a Savings Account or any other account.
Conclusion
A Savings Account offers guaranteed returns to investors through competitive interest rates. You can also opt for nomination facilities or set up auto-debits towards bills and recurring payments. You can use this account to keep the surplus money safe, which you can use at any time in the future or make it a base for carrying out all financial transactions.
