The main purpose of having a savings account is to deposit money at a safe place and at the same time earn interest on it, instead of stacking it up at home. By having a savings account with any bank, the investor also gets access to different investment avenues. For most people, this happens to be their first interaction with the banking and financial system.
However, other than being a safe avenue for funds, a savings account can be used for many different purposes. Most account holders are unaware of it, hence, do not use it to its full limits.
Here are some additional things that you can use your savings account for;
Investments like a Recurring Deposit (RD) or a Systematic Investment Plan (SIP) in a mutual fund can be started through your savings bank account. You can set up for a particular date of the month for a certain period, which can be as low as 2 months for your bank RD or SIP. Additionally, if you want to invest in securities, you can also open a trading and Demat account, if you have a savings bank account. Also, you can make investments in fixed deposits (FD) using the sweep-in facility, insurance, Public Provident Fund (PPF) and other investment instruments through Internet banking.
With more and more technological advancement, more is added to our plate. Similarly, the savings bank account also works as the account holder’s own cash management system. You can pay almost any bill payment through internet banking, including tax payments, loan EMIs, any third party utility bill payments, insurance premium, credit card payment, etc.
United Payment Interface (UPI) payments
You can also link your bank account to payment apps like, Paytm, GooglePay, BHIM, PhonePe which support UPI transactions to make instant payments.
Banks offer various other benefits, some of which also depend on the size of the account. Hence try to maintain a good relationship with your bank. For instance, pre-approved loans, credit cards with special limits, overdraft facilities, cashback, rewards and discounts on purchases, waiver of service charges, access to airport lounges, are some of the few offerings.
Income tax compliance
With a savings bank account, you will easily be able to trace how your assets have been funded from your income, as the account records the income earned by the investor, as well as expenses carried out by him/her. With the help of the annual bank statement, you can find out all the income earned which includes salary, interest, profit, gifts, dividends, etc. Hence, it is considered as a key document for income tax compliance.