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Why your Savings Bank Account is your financial gateway

Savings Bank Account

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Savings Bank Account article in Advisorkhoj - Why your Savings Bank Account is your financial gateway
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Yes, you heard that right! Your savings bank account is your financial gateway!!

When we talk about savings bank, we remember of an account when we were growing up and our parents helped us open one in the same bank where they maintained their account.

All of us see our savings bank account as an account which is used for miscellaneous purposes and do not attach much value to it as we do not know the benefits of a savings bank account.

Why we say it is your financial gateway?

All receipts come here – Starting from your salary or other fixed income, like bank interest, house rent (if you have given your house on rent), dividends received from shares and mutual funds etc. all credits come into this account. If you have a demat account then it is also linked to your savings bank account. As you can see, for receiving any credits and doing any financial transaction, there is no other type of account other than savings bank account

All payments go from here – Shopping for groceries,going to your consultant’s chamber, paying the electricity and telephone bills, outing with family… we all have never-ending to-do list in our daily life. How you manage this? Simple, it is our savings bank account which comes handy for doing all of these.

Apart from daily needs, you can setup a mutual fund SIP ECS (wherein a fixed amount is deducted on a fixed date), schedule your insurance premium payment when they are due, set up billers for those payment which are fixed in nature. You pay school premium, tuition fee and house rent, invest in mutual funds and shares or buy a life insurance etc., using the cheque of your savings bank account or paying for all these using the online banking provided in a savings bank account.

You can earn good interest – A good saving account interest rate could be zero and therefore, you are not penalized for not maintaining any balances. However, if you can keep some balance, you can get as high as 7% interest on the average daily balance. Therefore, you are rewarded in form of interest on the amount not used by you.

No need not pay any fees while your savings grow

Generally a good savings bank account does not charge you anything extra for using its services. As you can get interest as high as 7% on the money kept in the account even for a day, you grow your savings further without having to pay anything to the bank.

Savings bank interest amount upto Rs 10,000 is completely tax free

Yes, you heard that right! Interest earned on your savings bank account upto a maximum of Rs. 10,000 in a financial year is tax free under section 80TTA under the Income Tax Act. Therefore, while you can earn Rs 10,000 annually tax free from your savings bank account, the interest earned on your money invested in bank fixed deposit or in some other investments is totally taxable from Re 1.

Section 80TTA benefit is not available on interest earned on fixed deposits or recurring deposits of a bank.

No TDS on Savings bank interest earned

As you may know banks deduct TDS @ 10% on interest of fixed depots and recurring deposits if the interest amount is greater than Rs. 10,000 in a financial year. TDS rate of 10% is applicable provided your PAN number is available with the bank. If not, then the TDS is deducted at 20% on total interest earned.

Easily access your savings bank account online

You can access you savings bank account online through your smart phone, tablet or desktop.This convenience ensures you to do transaction online and without visiting the bank branch. You could even check in your savings bank account while shopping at the mall, sitting idle in the park or while buying groceries in the neighbourhood and so on..

Your savings bank account lets you deposit, withdraw, do shopping, pay utility bills and transfer money with lightning speed while offering good interest rates on the unused amount as well.There are banks where savings account interest rate is zero and thus you need not maintain any minimum balance.

Saving and managing money on a daily basis is a cumbersome work, but your savings bank account helps you do everything related to your finances and thus works as a financial gateway. Remember, the amount does not have to be large to enjoy all the conveniences. It’s a great gateway to maximize your conveniences using your savings bank account.

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Priyanka Chakrabarty

A literature enthusiast who loves to write. An ardent social worker who dreams of bringing about change and hopes to do so through her writing. A firm believer of the saying pen is mightier than the sword, Priyanka is an English Honours graduate. She also pursed Diploma in Wealth Management Practice from IIFP and is a certified social media expert.

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