Be wise and get yourself a medical emergency savingaccount

Life springs surprises when you least expect it.  And a medical emergency is no different. A person may be fine one moment and the other minute he would be on his way to get some medical attention. The situation may be unpredictable as it would be difficult to assess the nature of expenditure. Under such circumstances, your medical emergency fund could work as a shock absorber between you and your life.

Check out more features about a medical savingaccount.

Right time to start and stick on 

‘Now’ is the right time to start. Financial gurus going by the age-old adage ‘tomorrow never comes’ say there is nothing more disastrous than postponing opening up of a medical emergency account. But this is just the first step. The second most important step is to stick on to it and not get tempted to use the money on other things of indulgence.

Easy accessibility

Do you remember how well our grandmothers hid some money in those grocery cans, in-between books and under the bed mattresses when they could have easily stowed it away at better places? They did so not only from getting all their money raided in one go but also for easy accessibility. Isn’t it similar to the savingaccount? We have to meet our different goals and reduce the temptation of shelling out all the money at one go – and of course, easy accessibility? A medical emergency fund must be easily accessible for when you are ill and have not much time and energy doing bank transactions.  

How much you must save?

Ideally, there is no specification on how much you must save in savingsaccount for a medical emergency. But whatever surplus amount is left after paying off monthly dues and other expenses must be invested for a medical emergency fund. This will also help you avoid the habit of irrelevant spending. Although, living comfortably is no sin, overindulgence could be.

Here, we are not advising you to live miserly. There is nothing wrong with pursuing things as long as you don’t dent your financial security. All we are telling you is to get over the habit of indulging in every desire and save every penny you can for those tough times.

Follow our mantra for a happy and secure financial future - savings shouldn’t just be a temporary phase initiated to deal with a financial crisis, but a way of life.

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Lesser known facts about minimum balance in savings account

Minimum balance in savings account is the mandatory lower limit of money prescribed by a bank. This means that if account holder at any given point of time dips below the prescribed limit, he would not be liable to receive the benefits like denied interest payments and may even have to pay a penalty. A customer earns his interest based on the minimum average balance maintained in the account and the same may vary from bank-to-bank.

Earlier when the Reserve Bank of India (RBI) introduced the concept of savings bank accounts with a minimum balance. This gave the banks the authority to charge customers with a requisite or pre-determined amount if the customers failed to maintain the balance.

Compared to private sector banks, most public sector banks are known for maintaining savings accounts with a lower limit of money. If a minimum balance is not maintained in the account, the customer is liable to pay charges on non-maintenance of AMB as applicable. While some Public sector banks levy a charge anything between Rs 30 and Rs 500 for non-maintenance of minimum balance in savings account, private sector banks charge from Rs 500 to Rs 750. This compulsory lower-limit balance is also known as the Average Monthly Balance (AMB) or Average Quarterly Balance (AQB) and it is generally higher in urban areas than in semi-urban and rural areas.

The penalties are charged in proportion to the extent of shortfall observed. Secondly, several banks require customers to maintain a minimum balance for a digital savings bank account as well.

Before we proceed on other important points, it is important to understand why banks levy this mandatory lower-limit amount on account holders. Remember, these brick-and-mortar banks require high-value maintenance. This means they have to make heavy investments in setting up branches and ATMs, payment of staff and back-office operations, maintaining call centres, and much more. And they have their ways of meeting these expenses.

If the above gives you the impression that banks are siphoning off their customer’s money to meet their expenses, then we would like to tell you that this is not the case. On the contrary, they help the customers maintain the mandatory lower limit by providing them online banking and sends them SMS alerts if the amount goes below the limit.  Apart from this, some banks are also known to waive off the minimum balance in savings account if the account holder has a fixed or recurring deposit for about a year with the bank.

Join us for more on savings bank accounts and minimum balance penalisation on https://savingaccount.in/blog/digital-bank-account.

Help your child graduate from piggy to real bank with savings account

Probably we all had our first independent savings bank accounts when we first started to work and our companies provided us with bank forms so that they could put our monthly earnings in it. Also, many of us would have held joint accounts with our parents and also occasionally visited the bank with them to carry out certain transactions. Isn’t it? That was a thing of the past. Now, children as young as a-year-old, have a savings account. The facility existed even when we were young, but the concept was not much in vogue.

Today, banks are promoting ‘child savings account’ more than ever and even parents are welcoming the idea. But getting the best deal for your baby is a tough thing to do and you need to check-out the best suitable options that would help your child’s funds grow steadily if not by leaps and bounds.

Here are a few tips that you as a parent must explore while opening a savings account for their child.

1. Security features: This should be the top priority while finalising a savings account for your child. Most accounts come with the security of zero liability. This protects the little account holder’s debit card from theft or unauthorised purchases. Additionally, opt for text alerts to your mobile number to stay updated about every transaction made on your ‘child savings account’.
2. E-banking facilities:A lot of banks offer free internet or mobile banking access apart from free email, prepaid mobile recharge, pay utility bills, stop cheque payment via SMS facilities and more. Do not forget to encash on them.
3. Additional benefits: Banks offer additional benefits like educational insurance cover, no monthly fees, free cheque book and passbooks annually, unlimited free transactions, etc. Avail all of them.
4. Freebies and rewards: Debit cards are issued to children above 10-years of age and come with a withdrawal limit of maybe Rs 1,000 and above as daily spending limit and a spending limit of Rs 8-10,000 at merchant locations. Some banks even add a personal touch to the junior account holder’s card by putting a fun image or the child’s photo embossed over it. Most banks also offer exciting rewards programmes like book vouchers, movie tickets and discount vouchers for the account holders of child savings account.

Financial experts say that it is never too early nor ever too late to have a savings account. Listen to them.  Most commercial banks, microfinance lenders, cooperative banks, some non-banking financial corporations and other new-age digital financial entities in the country offer the facility of savings account for minors.

Check out more on https://savingaccount.in/blog/kids-bank-account.

Gift your kid a savings account

If your daughter is one of those who have been responsible with her pennies, she deserves a saving account for sure on her 18^th birthday. Since 2014, there has been a visible increase in the number of savings accounts for minors in private and public sector banks after the Reserve Bank of India (RBI) gave banks a green signal.

The Central Bank authorises parents and guardians of children less than 10 years of age to operate the savings account after they can operate it independently. Once the child turns 18, the account becomes dormant and in order to get the regular benefits and interest, it is essential to convert it into a regular savings account. It is equally important to allow them to make harmless mistakes and let them learn from them. The idea must be to train or educate the child and not incur financial losses in any way. You could also opt for a kid’s a savings account with restricted withdrawals or expenditure via debit cards is a good idea till your child is matured enough.

Just opening a savings account without imparting the right education to little ones could result in more harm than good for your children’s future. So, before you finalise on the savings account for your minor or teen, scan banks that have the lowest minimum balance criterion. Doing so will the money from getting locked up at low interest.

So, a savings account with a bank looks like a perfect gift for children to make them learn about banking. Make the most of this opportunity to teach your child about money matters and being responsible.

Wonders of a minor’s savings account:

Kid’s savings account teaches them 

• to plan ahead
• to stay focused on goals and priorities
• to save for things till they can afford it
• the value of money 
• to learn basic math skills
• to grow their money  
• to become comfortable with bank operations and financial dealings.

Documents required for opening kids savings account

To open a savings account for minors, you may be required to submit a few documents. 

These include 

• a recent photograph of the minor applicant
• proof of date of birth of minor (birth certificate issued by Municipal Corporation or Passport)
• proof of relationship between the parent/guardian and the minor applicant (ration card or life insurance policy), 
• PAN of the parents/guardian and address proof.

A savings account for minors is an ideal way to expose them to financial education and first-hand experience in money matters. It is a good idea to encourage children to be responsible with money and make sincere efforts to answer their questions on bank operations.

We, at https://savingaccount.in/blog/kids-bank-account have all the important information that you must know about children’s savings accounts. Stay with us for more.  

Salient features of Types of Savings Account and more

Banks have different types of Savings Account that suit the requirement of their precious customers. Savings accounts are a great place to stash your savings that grow steadily with interest rates and your contributions. Your money remains safe and accessible while paying interest. Not only this, you can have multiple savings account to meet your different goals.

Very little is known about the features that these savings account offer. Read on to learn more about some of the features of different Types of Savings Account that different banks offer to their customers.

Basic savings accounts: These encourage people to save money and collect their savings.

• Allows multiple activities and more: Apart from allowing you to save money, it allows the transfer of funds, withdrawal of money and more. There are different types of specialised savings account for kids, women and pensioners.
• Nominal interest rates: Enables the depositor to earn a nominal rate of interest on your surplus money without blocking them for any period. The interest rate ranges from 3.25% to 7.00%

types of savings account

Money market accounts (MMAs): It is a market for short-term loans that provides money for working capital or circulatory capital. 

• Short term credit market: It consists of organised and unorganised sector.  While the organised sector comprises the Reserve Bank of India (RBI) and commercial banks, the unorganised sector has indigenous bankers and money lenders.  
• No fixed geographical location: Its common institutes like the RBI, the State Bank of India and other commercial banks deal on the telephone and fax only.
• Major financial institutions: Financial institutions like non-banking financial intermediaries, cooperative banks, Export-Import banks cater to the financial requirements of different sectors.
• Common Instruments: Call money, Treasury Bill, Commercial Paper, CDs, Commercial bill, etc., are some of its instruments.

Certificates of deposit (CDs): These are issued by commercial banks can have a maturity period ranging from 7 days to 1 year.

• Availability of Loan: Banks do not grant loans against them as they do not have any lock-in period. In fact, these financial institutions cannot even buy back certificates of deposit before maturity.
• Eligibility: Only scheduled commercial banks/financial institutions in India can issue CDs to individuals, companies, funds, etc. Also, it can be issued to Non-Residential Indians (NRIs) on non-repatriable basis.
• Maturity term: A CD has a maturity period ranging from 7 days to 1 year. For financial institutions, it ranges from 1 to 3 years. 
• Transferability: CDs in Demat forms are transferred according to Demat securities guidelines. Dematerialised/electronic certificates are transferred by endorsement or delivery.

The banking system embraces all these features and makes sincere efforts in providing the best Types of Savings Account for the benefit of its customers. 

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Is savings bank interest taxable?

We all loves interest rates. Don’t we? The higher they are the better are the savings and better are the reasons for the account holder to smile. But wait. Did you know savings bank interest rates come under the ‘Income from other sources’? Yes. They are considered as an income and are thus taxable. Savings accounts are much more multidimensional than most account holders can even think of. The more they discover and realise about these great deposit accounts, the better are the chances of growing their hard-earned savings.  

Interest amount that gets accumulated in an individual’s savings account must be declared in tax returns. The required minimum deposit and interest rate varies depending on the type of savings account held by the customer. Remember, banks do not deduct Tax Deducted at Source (TDS) on savings bank interest. In simplified terms, people open a savings account to earn interest on savings. Banks calculate the interest by multiplying the rate of interest of the money deposited in the account holder’s account. The interest rate constantly changes from time-to-time. Experts have suggested keeping minimum balance in the savings accounts because the rate of interest is very low and it is also reduced by income tax payable at 2.8% per annum for person in 30% tax slab with 4% on saving account interest.

All individual taxpayers and Hindu undivided Fund (HUF) account holders are liable to pay tax for the interest they receive. However, interest up to Rs 10,000 is exempt from tax under Section 80TTA and Rs 50,000 for senior citizens under Section 80TTB.

• Savings account in a nationalised or regional bank
• Savings account in a co-operative society carrying on the business of banking
• Savings account in a post office

Calculating exemption limit:

Earlier banks offered interest on minimum balance available in the account in a month, but now banks calculate interest on a daily basis on the money lying in your account at the end of the day. This gives customers better benefits due to higher interest based on their deposits.

Savings bank interest income from all the accounts are added, including bank savings accounts, post office savings accounts, and co-operative bank savings accounts.

However, account holders can reduce their taxability by availing the many tax benefits available under the Income Tax Act, 1961. The account holders just need to know how interest income is taxed.  

Online-only savings account

There are a lot of online-only savings accounts attracting customers to open and manage account completely using the internet. These offer better rates as the organisation is not dealing with same overhead cost like traditional banks and these saving are hence, passed on to the account holder.

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Beat the dipping bank saving account interest rate

Lack of productive savings account options can be a problem with the ever dipping bank saving account interest rate. When rates fall on instructions of the Reserve Bank of India or due to monetary policies, banks feel pressured to lower the interest they charge for loans and also the interest they pay to the depositors. Savers and those who take loans from banks are the first to feel the impact and face a battle to get decent returns from their cash.

But let us first understand how interest system works. It all starts when RBI lends money to commercial banks in the country at low rates (Repo rate). Every time there is a cut in repo rate, banks borrow money from the RBI at lower interest rates and there is a decline in the interest rates on loans as well. Personal loans, car loans, home loans, etc., become cheaper. On the other hand, as banks tend to decrease the deposit rates, account holders see a dip in their bank saving account interest rate.

Check out the few risk-free options we have for our investors who are looking out for opportunities to generate additional returns.

1.     Fixed Deposits (FDs): FDs fetch a higher rate of interest than a regular savings account and is not prone to market fluctuations. Interest can be earned monthly, quarterly or annually as desired by the investor.  As per Income Tax Act-1961, earning on FD is exempted up to Rs 10000. Also, there are preferential interest rates for senior citizens.

2.     Money Market Account (MMA): It is a very safe way to get good returns. MMAs offer relatively high-interest rates and come with cash withdrawal privileges. The interest is tiered, compounded and credited monthly to accrue more profit as the account balance increases. Account-holders easily access their accounts through ATMs, online transfers and cheques.

3.     Liquid Funds: They have evolved as an ideal option for short-term investors allowing investors to earn steady returns over short time intervals. Liquid funds carry the lowest risk and belong to the debt category of mutual funds. Once the customer submits a redemption request, he gets the money within a working day. 

4.     Payments Bank Account: Modern banking systems do not require physical bank branches. Thus, the cost savings due to operational efficiency is handed over to customers by way of the higher interest rate. It is same as existing FD rates and highest savings account interest rate among all the banks.

So, next time interest rates hit rock-bottom don’t worry about your bank saving account interest rate. Just follow our tips and sail through the crisis.

Stay tuned with us at https://savingaccount.in/ for more details on a healthy savings account.