Savings Accounts is a great place to hold cash that you do not plan to spend immediately. Because it keeps your money safe and accessible by giving you a small amount of interest.
Savings accounts are useful when planning for short-term needs. Such as emergency funds, or long-term goals such as reducing payments for a home.
In the last two years, the number of new savings accounts in India has increased significantly with the introduction of the government-sponsored Jan Dhan Yojana.
Here are Different Types of Savings Accounts as followed:
Types of Savings Accounts
1. Basic/Regular Savings Accounts
A basic savings account provides only a few key features and fees. However, there is no limit to the amount of time you can deposit.
The simplest form of this, a savings account is just a place to keep the money. You deposit into the account, earn interest, and withdraw money when needed.
In most cases, this type of account requires a minimum average balance. And failure to meet it can result in fines.
Regular or basic savings account generally allow you to earn interest on your money. Although they usually pay lower rates than other savings products.
But there are some limitations to how often you can withdraw or transfer funds up to six times per month for publicized withdrawals or transfers but unlimited in person.
2. High-Yield Online Savings Account
High yield savings accounts are savings accounts that offer higher APY as compared to regular savings accounts.
Online banks often offer high-yield savings accounts to attract savers who want to earn good interest rates than those found in other banks and credit unions.
These types of accounts were initially only available through banks-only. But most traditional, brick-and-mortar banks now include online capabilities such as online bill payments and remote deposits.
This type of savings account can be attractive if you are comfortable managing your account online or through mobile banking versus visiting a branch either.
To use an online account, you also usually need a brick-and-mortar bank account. This is your “linked” account and is typically the account you will use for your initial deposit.
Once your online account is ready and running, you can also deposit from other sources. You can also deposit a check in your account from your mobile phone.
Online banks charge more or less including monthly maintenance or additional withdrawal fees.
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3. Money Market Accounts
Money market accounts (MMAs) combine the features of a regular savings account with the facilities of a checking account. You can find these accounts at both brick-and-mortar banks and online banks.
These accounts, also known as Money Market Savings Accounts or MMSAs, allow you to earn interest on your savings.
Rates are typically better than regular savings accounts. You can usually write a check against the account, and you may also be able to spend those funds with a debit card.
However, like any savings account, there are limits to how many withdrawals you can make per month. Banks can impose a fee if you make more than six withdrawals per month.
4. Certificate of Deposit Account
Certificates of Deposit (CD) are time deposits, meaning that you agree to leave your money in the account for a set period of time.
CDs are also similar to savings accounts, but they usually pay more.
You can find CDs in traditional banks and online banks. Between the two, online banks offer better interest rates.
CD terms typically last longer than 30 days or up to 60 months. Usually boasting higher rates over the long term – though not always, especially in a low-interest-rate environment.
5. Cash Management Account
Cash management accounts are not accounts per savings. Instead, these accounts let you keep the cash you can plan to invest in a taxable brokerage account or retirement account.
Online brokerage and Robo-advisory platforms can offer cash management accounts to their investors.
Depending on the brokerage, you may get all the standard features that you would expect from a checking account.
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6. Student Savings Accounts
With the common exception of online banks, savings accounts can be expensive if you do not keep a large balance in your account.
Banks usually charge monthly maintenance fees, and they pay little or no interest in small accounts.
For students, some banks offer student savings accounts that do not charge monthly fees.
7. Joint Account
A savings account that is controlled by more than one account holder is called a joint account.
In this type of account, either the account holders can withdraw the deposited funds and debit cards can be issued separately with the name of each account holder.
There were two holders in joint accounts, usually husband and wife. However, the concept has now been extended to other family members.
Some banks allow up to four joint holders in the case of such accounts. All banks that provide savings accounts also offer joint accounts in India.
8. Salary Account
A salary account is a special type of savings account that can only be opened by a salaried person.
Most employers deposit the employee’s monthly salary and bonus directly into this account.
If the account holder’s salary is not credited continuously for 2-3 months, then these accounts are converted into basic savings accounts.
9. Pradhan Mantri Jan Dhan Yojana Savings Account
Savings accounts promoted under this scheme are available in Yes Bank, Kotak Mahindra Bank, Axis Bank, State Bank of India, Bank of Baroda, and many other banks.
Accounts opened under this scheme are linked to a RuPay debit card and a maximum of 4 withdrawals per month are allowed on this type of account.
There is no minimum balance or annual fee for this account. Additionally, an insurance cover of Rs. 30,000 as well as Rs. 1 lakh accidental cover provided to the account holder at no charge.
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