FAQ’s On Savings Bank Account – Interest Rate, Minimum Balance & More
It is an account for day to day operations providing easy access to our funds, which are not safe now a days when kept in home, office, or in person.
Is saving bank account interest taxable?
The interest is taxable upto certain limit and varies from time to time according to the income tax rules.
Is it a type of investment?
Yes, this is also a type of investment, like other accounts and investment types.
Why is the interest rate so low?
Since it is a fluctuating type of a/c where in deposits changes on day to day basis, based on rbi and banks guidelines, the interest on such type of a/c is kept nominal. Banks cannot earn more interest on such type of deposits, hence banks do not pay more interest on the balances kept.
When is the interest paid by the bank?
As per the RBI rule, banks in India are free to choose the interest paid on accounts. Earlier the interest was paid on minimum balance kept between 10th and last working day of any month. But starting from 1st april 2010 banks calculate interest on savings account on the basis of daily products. With this new formula, customers can get slightly more interest every month.
Why is it important to have a saving account?
For easy day to day operations, such type of a/cs are must and convenient.
How can you withdraw money?
You can withdraw from banks by withdrawal slips/cheques, or by an ATM card etc.
What to look out for before choosing an account?
A person should check rate of interest rate, minimum balance required, internet banking facility, mobile banking, amongst other important things.
What does a.e.r mean?
Annual earned rate of interest.
What is the best type of savings account to open for a child?
Upto 10 or 12 years of age child can open a/c with their parents or even grand parents or uncle etc. When they reach an age of 10 or 12 years and get knowledge of banking terminologies and operations etc. and are able to sign regularly, they can alone open their a/cs. There are also pigmy type of a/c where amount as low as INR 5 or 10. are accepted. Sometimes bank executives visit classrooms or offices and help students, so that in future they can be best depositors.
What is the minimum balance required?
It differs from bank to bank and location to location. Some banks ask for INR 500 for non-cheque operated a/c and INR 1,000 for cheque operated a/cs. whereas others demand INR 10,000 or even more to open an a/c and in such banks they have to maintain some minimum everyday balance with starting range from INR 5,000 onwards.
What happens when you fail to maintain minimum balance?
Service charges are to be paid in case of failure to maintain minimum balances.