Everything you want to know about Savings Account

What is Saving Account?

As the name suggests, Savings Account helps customers to save their money in banks and enjoy the dual benefit of liquidity and interest. This account is maintained by fixed salaried persons or who have a fixed income. Basically, people park the amount of money into savings accounts, that they are not willing to use as the daily requirement and the best part of having a saving account is you can withdraw your amount anytime, which makes it completely liquid.

Previously interest rates of the savings account were fixed at 3.5% per annum but later in 2011 RBI deregulated the rates and now every bank can set their own interest rates. In India, it ranges from 3.5%-7%. To understand more about the savings account, read the below article-

Benefits of Savings Account

• Saving Account allows a customer to earn interest on deposited money without blocking them for a period of time
• It encourages the saving habits in the individuals
• Banks also give other facilities to its customers such as passbook, net banking, debit card, fund transfer facilities i.e.IMPS & NEFT, pay utility bills, linking your credit card accounts to your saving accounts etc which are completely hasslefree.
• Saving account gives a feeling of security to the individuals and they feel financially secure.
• Saving account passbook can be treated as the ID and residential proof of the individuals.
• Some of the savings account provides the feature of a zero balance account.

Minimum Average Balance(MAB) Requirements in Saving Account

Different terminologies have been used for this term such as minimum balance, minimum daily balance, minimum quarterly balance. It is the average balance that you should keep in your account for a specified period of time.

The easiest way to calculate Average Balance is adding up the everyday balance and dividing it by the number of days in a particular period. In case of non- maintaining minimum average balance you will have to pay the non-maintenance penalty. Every bank has its own policy for maintaining an average balance.

Saving Account Interest Rates

Do you know you can save tax on Interest from Saving?

As per section 80TTA of Income Tax Act,1961 interest earned on the savings account is exempt from being taxed if the interest earned amount is up to 10,000 rs. Interest earned on the savings account that is above 10,000 is liable to be taxed as per the income tax slab and will be mentioned under Income from other sources while filing Income Tax Return.