Long gone are days when you opened a savings bank account to just keep your funds safe. Many today open a savings account to avail a wide range of benefits in the form of unlimited cash withdrawal at any banks’ ATM, accidental death cover, exclusive discounts on a specific brand, zero minimum amount balance (MAB) requirement, discount on locker services, cashback on entertainment, dining, etc. Also, nowadays, nearly all banks give you the option to open a bank account online from the comfort of your home with minimal documentation at nil MAB requirements.
Apart from the aspects mentioned above, there are other significant reasons to open a savings bank account. Here are 4 such crucial reasons to open a savings bank account, which can help attain financial stability.
Avail fund protection in the form of deposit insurance cover
Savings bank accounts opened with scheduled banks are covered under the DICGC (Deposit Insurance and Credit Guarantee Corporation), a subsidiary of RBI. The insurance provides a cover of up to Rs 5 lakh per depositor per bank on the occasion of bank failure. This insurance cover is also applicable to other bank deposits like fixed deposits, current accounts, and recurring deposits.
Prepare an emergency fund.
One of the central pillars for forming sound personal finance is efficiently preparing for financial emergencies. No matter how much you earn or your social status, nobody can be immune to contingencies and must prepare for it. Forming an emergency fund in a savings bank account is the only way to deal with such situations as it provides the highest form of liquidity at minimal risk. Note that your emergency fund in a savings account must equal at least six times your monthly mandatory expenses.
Meet short term crucial financial goals of less than 3 years
Short-term crucial financial goals are generally referred to as having a time horizon of up to 3 years. As the short-term horizons come with lesser time to recoup losses from the market corrections and volatilities, if any, investments must not be made inequities. Investment towards a shorter investment horizon must emphasize income certainty and capital preservation than generating higher returns. This can be attained by investing in savings bank accounts.
Avail benefits and offers on debit card
Debit cards provided and savings accounts come with various attractive offers like discounts, reward points, cash back, etc., which can help you save some money. Additionally, the usage of debit cards available through savings accounts allows you to instantly make a point of sale (POS) transaction and online transactions. This avoids the need to opt for the traditional mode of visiting banks to withdraw cash for transactions.
Savings bank accounts come with several benefits. These bring about financial discipline, make transactions more accessible, and help meet short-term financial goals. Alongside, they even give you the accessibility to instant funds to meet emergencies and avail offers on debit cards.