Moneycontrol
Last Updated : Sep 25, 2018 12:06 PM IST | Source: Moneycontrol.com

Don’t leave your savings bank account unused! Here's why

A savings account is an enabler when it comes to the world of investment

Moneycontrol News @moneycontrolcom
A savings bank account can actually help you save some money. Barring a few banks offering 6 percent on savings account balances, most of them pay you a not-so-attractive rate of interest of 3.5 percent, but also it brings you a whole lot of services and benefits which can be tapped to create wealth. Here are five reasons you should not ignore your good old savings account…
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A savings bank account can actually help you save some money. Barring a few banks offering 6 percent on savings account balances, most of them pay you a not-so-attractive rate of interest of 3.5 percent, but also it brings you a whole lot of services and benefits which can be tapped to create wealth. Here are five reasons you should not ignore your good old savings account…

A savings account is seen by many money experts as a means to accumulate wealth. However, not many millennials look at it that way. Invariably many of us end up with multiple bank accounts – thanks to changing jobs and changing cities. Such a situation must be avoided. Not only does it make us maintain minimum balances or get saddled with a list of dormant accounts. Ensure that you keep one account that is used as a ‘savings and investment’ account.
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A savings account is seen by many money experts as a means to accumulate wealth. However, not many millennials look at it that way. Invariably many of us end up with multiple bank accounts – thanks to changing jobs and changing cities. Such a situation must be avoided. Not only does it make us maintain minimum balances or get saddled with a list of dormant accounts. Ensure that you keep one account that is used as a ‘savings and investment’ account.

If you ignore bank accounts and let them dry up, there is a chance that the bank will levy penal charges for non-maintenance of minimum balance. This will burn an unnecessary hole in your pocket. You should note all other charges that come with each account. Some accounts offer many free facilities such as free fund transfers, demand draft, bill pay services. If you know about them well in advance, you can make the most of them.
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If you ignore bank accounts and let them dry up, there is a chance that the bank will levy penal charges for non-maintenance of minimum balance. This will burn an unnecessary hole in your pocket. You should note all other charges that come with each account. Some accounts offer many free facilities such as free fund transfers, demand draft, bill pay services. If you know about them well in advance, you can make the most of them.

We all pay our EMIs for loans out of our savings account, but we rarely use it to pay bills. Most banks offer bill services along with programmes that give customers reward points. Timely payment of bills, by way of standing instruction on savings bank a/c, ensures that there is no wastage of money because of late payment charges.
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We all pay our EMIs for loans out of our savings account, but we rarely use it to pay bills. Most banks offer bill services along with programmes that give customers reward points. Timely payment of bills, by way of standing instruction on savings bank a/c, ensures that there is no wastage of money because of late payment charges.

A savings account is an enabler when it comes to the world of investment. You cannot invest in mutual funds without it. It gives you access to traditional products such as recurring deposits and fixed deposits. Some banks offer you facilities such as auto sweep that invests idle sum lying in your account into fixed deposits if the sum exceeds a threshold, say Rs 25,000. This ensures that even if you forget to invest money in your account, the money is put to work. Savings accounts with such facilities should be preferred.
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A savings account is an enabler when it comes to the world of investment. You cannot invest in mutual funds without it. It gives you access to traditional products such as recurring deposits and fixed deposits. Some banks offer you facilities such as auto sweep that invests idle sum lying in your account into fixed deposits if the sum exceeds a threshold, say Rs 25,000. This ensures that even if you forget to invest money in your account, the money is put to work. Savings accounts with such facilities should be preferred.

Interest paid on the balance in the savings bank account is taxable in the hands of the bank account holder. However, there is a way to reduce the tax impact. Section 80 TTA provides for a deduction of upto Rs 10,000 for aggregate of interest earned by you on all the savings bank account whether with a bank or a post office. Ensure that you report your interest income on savings account while filing your income tax returns and pay tax on it, if it exceeds the threshold. Savings bank account if used wisely can open doors to financial freedom for you.
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Interest paid on the balance in the savings bank account is taxable in the hands of the bank account holder. However, there is a way to reduce the tax impact. Section 80 TTA provides for a deduction of upto Rs 10,000 for aggregate of interest earned by you on all the savings bank account whether with a bank or a post office. Ensure that you report your interest income on savings account while filing your income tax returns and pay tax on it, if it exceeds the threshold. Savings bank account if used wisely can open doors to financial freedom for you.

First Published on Sep 25, 2018 09:30 am
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