The savings bank account is the most basic type of account at a bank which allows you to deposit money, keep it safe, and withdraw money as needed. Savings bank account typically pay interest on your deposits, but interest rates are moderate on these accounts. So, savings bank account generally are opened for keeping money which you don’t use it for daily or regular expenses. Even you can make an unlimited number of cash withdrawals from your savings account at an ATM. Also, banks may also charge fees unless you maintain a certain average monthly balance in the account. Below are the advantages of a savings account.
Guaranteed interest rates
The Interest rate which is fixed by RBI has to be the same for all the savings bank accounts across all the banks. However, banks are free to determine the interest rates on the capital in a savings bank account. So, you can gain interest in your money over time with a savings bank account which means you have more earning potential with your money in a savings bank as compared to keeping it in a safe at home.
One of the primary benefits of savings account is its liquidity which means that savings account offer easy access to your cash. The savings account allows an easy access to your deposited money whenever required where you can withdraw your money as often as you like using an ATM. Savings account helps to use funds much easier when compared to taking money out of stocks, bonds, or certificates of deposits which might result in penalties. This method is useful in advantages of a savings account.
Taxation on Savings Bank Account
Interest from Savings bank account is tax-deductible to a certain extent and they are shown under income from other sources. The deduction is allowed on interest income earned from a savings account with a bank, with a co-operative society or with a post office. The interest which gets accumulates in your savings bank account above the amount of Rs10,000 must be declared in your tax return under the head income from other sources.
The above-mentioned methods are the ideal benefits of using a savings account in any bank for your purpose. Hope that I have covered all the topics in my article about the advantages of a savings account. Thanks for reading!