Many of us would remember the first time we walked in to a bank. For most of us, our first association with a bank would be for opening a savings account.
Bank savings account has evolved over the years from just keeping our liquid money to not only earning interest for us but also providing a plethora of various add-on services. The KYC norms have also made the procedure of opening savings account much simpler and easier.
An account which can be opened with the lowest balance, the add-on features include a passbook, a debit-cum-ATM card, a cheque book, internet banking, monthly or quarterly statements, and free SMS/email transaction alerts.
The deregulation of interest rates on savings accounts by the Reserve Bank of India has seen many Banks offering interest rates almost as close to that on fixed deposits.
The best form of liquid asset to which you have the almost unbridled access, some obvious advantages of a savings account can be summarised here.
With a time delay involved in getting access to your money in most forms of investments, when you need quick access to your funds, thankfully, the money sitting in a savings account is what takes care of that problem immediately.
The DICGC, a wholly owned subsidiary of RBI, guarantees up to INR 1,00,000/- per depositor per Bank and on that count, a savings account is the safest, since it can be withdrawn immediately. Sceptics who believe the sky is about to cave in on us would argue that this guarantee is worthless; but let us admit that this guarantee makes a savings account as safe as anything you are going to get anywhere. And as Warren Buffet often remarks, “Rule #1 in investing is: Don’t lose it. Rule #2 is: See Rule #1.” For safety, it is hard to beat the savings account.
Easy to start
The simplest, most straightforward bank account that you can ever have, getting started with opening a savings account is both quick and easy without almost no conditions and minimum documentation.
The reason why savings accounts retain their importance for us in our lives is because it is always critical to have safe, easy to access money set aside for emergencies that could occur anytime.
When you need money fast, you don’t need to put the expense on a credit card and that’s where savings account is your saving grace allowing you to sleep better at night knowing that you are prepared for the unexpected.
When we talk about credit cards, in spite of the danger of overspending and running up major interest charges, they offer enormous advantages over other methods of payment for those who use it wisely.
The most obvious strength of credit cards is their convenience which means no running to the bank for cash, counting out change, or hurriedly writing a cheque when you need to make a purchase.
Credit cards can also help in budgeting monthly expenses, based on your credit limit provided you pay your bill in full every time. It also acts as a receipt displaying an itemized listing of what you spent your money on.
Besides the convenience aspect, there are other benefits of using credit cards:
Most banks offer cash back opportunities if you use your credit card to pay monthly utility bills, grocery purchases or for use at online shopping portals.
Most credit cards offer reward points for purchases made with your card which can be redeemed to purchase gifts available on their rewards page.
In case of big-ticket purchases, the total cost can easily be converted into affordable monthly instalments at some nominal interest.
Using a credit card allows you to defer your payments till your bill is due which generally extends to around 45-50-day grace period to pay back your dues.
Credit cards are safer than debit cards as in case of online purchase frauds, the money is not immediately deducted from your account. Most secured payment gateways also offer additional password protection while using the cards online.
Provided they’re used responsibly and managed effectively, credit cards can be a flexible and convenient way to borrow money and pay it back over time, being your saving grace at times you are in a bind without cash.