Banks receive money from the public by way of deposits. An individual may choose any one or multiple schemes offered by a bank to save money. Usually, the preference of a bank scheme would depend on its features and benefits. It also depends on the more beneficial features compared to other banks.
Common Bank Saving Schemes Offer to Public
- Saving deposit.
- Fixed deposit.
- Recurring deposit.
- Current deposit.
- Miscellaneous deposits.
Savings Account
A savings deposit account is meant for individuals who wish to deposit small and regular amounts out of their current income. A savings account could be opened with or without a chequebook facility. Usually, there are restrictions on the number of withdrawals from a savings account.
Savings account holders have the facility to deposit cheques, drafts, dividend warrants, etc., which are drawn in their favor.
Opening a savings account with a bank requires a few formalities like:-
- An introduction of a new customer by an existing account holder,
- Customer verification as per the guidelines issued by the government and regulatory body. It is also known as the KYC process, etc.
- Some minimum balance needs to be maintained in a savings account.
Fixed Deposit
The term Fixed Deposits means deposit repayable after the expiry of a specified period. Since it is repayable only after a fixed period, which is to be determined at the time of opening an account, it is also known as a time deposit.
Fixed deposit schemes are usually one of the most beneficial schemes to a bank. Since they are repayable only after a set period, a bank may invest this amount profitably by lending at higher interest rates and for a relatively long period. The rate of interest on fixed deposits depends upon the period of deposits. The longer the period, the higher the rate of interest offered.
Recurring Deposit
Under this scheme, an account holder must deposit a fixed amount of money monthly for a specific period. Each installment may vary from Rs 50/- to Rs.500/- or even more per month, and the period of recurring deposits could be from 12 months to 10 years. After the completion of the specified period, the customer gets back the deposit amount along with the cumulative interest earned on the deposits.
Miscellaneous Deposit Schemes
Banks at different times may introduce new schemes to get deposits from the public. These deposit schemes could be like; the Home Construction Deposit scheme, Sickness Benefit deposit scheme, Children Gift Plan, Old Age Pension scheme, Mini Deposit Scheme, etc.
Current Account
A current account is also known as a demand deposit account. An amount in an existing account could be withdrawn by the account holder any number of times. This withdrawal could be made like online banking or by visiting a bank branch. Bank allows opening a current account by a business firm and companies. Business entities are usually required to deposit and withdraw money frequently.
A current account does not provide any interest on its balance as the amount deposited in an existing charge could be withdrawn any number of times without any restriction on the number of withdrawals.
Banks may charge an account maintenance fee from account holders. Account maintenance fees could be charged on a monthly or annual basis.
Conclusion: Benefits of Saving Money with a Bank Savings Account
In the long run, banks can provide better and cheaper services than other financial institutions. The benefits of saving money with a bank savings account include:
- A higher interest rate when you deposit for a more extended period.
- You can access your money at any time without restrictions.
- The bank is obligated to protect your deposits and will not let them be taken away from you unless the state’s law requires it.
The benefits of saving money with a bank savings account are numerous. It is a way for individuals to save for the future and achieve financial freedom.
A bank savings account can be used to build wealth and provide a safety net in times of need. It offers peace of mind from knowing that your money is safe and secure, even if you cannot always access it.
