A savings account is the starting point of smart money management. But it can do much more than just hold your money. If used wisely, it can facilitate better earnings, savings, and of course, financial planning. Think of it as not just a safe haven for your money, but as a convenient tool that works in your favour.
The following are a few easy ways to utilise your savings account to the fullest:
- Choose the Right Type of Savings Account
All savings accounts are not created equal. Some offer better interest rates, and some may be more convenient. For example:
- High-Interest Savings Accounts: Usually give higher returns than normal accounts.
- Salary Accounts: Typically have a zero minimum balance requirement among other benefits.
- Digital-Only Accounts: Can potentially offer better rates due to lower overhead costs.
Compare banks, go over the different account features, and choose one that fits your needs the best.
- Look for Higher Interest Rates
Interest is what the bank pays you for holding your money. Although savings account interest rates in India are typically between 2.5% and 7%, there are banks that reward you more if you hold more money. This can be further confirmed during online account opening.
- If Applicable, Maintain the Minimum Balance
Some accounts require a minimum balance. If not maintained, you can be charged a penalty. This could nibble away at your interest earnings.
If you are not able to maintain the minimum balance, opt for a 0 balance savings account. Most digital banks and salary accounts offer this.
- Transfer Money Automatically to Save Automatically
Do you want to save without giving it much thought? Set up a recurring transfer from your main account to your savings account monthly.
Example: If you get salary on the 1st of every month, plan an auto-transfer of say ₹5,000 on the 2nd. This way, you can build a habit while saving your money gradually.
5. Use Your Savings Account to Attain Short-Term Goals
Instead of keeping all your money in one account, open separate 0 balance savings accounts for different needs.
Example:
- Account 1: Emergency Fund
- Account 2: Travel Fund
- Account 3: Gift Shopping
This makes tracking your goals and progress easier.
6. Link Your Account to UPI and Payment Apps
Link your savings account to UPI (Unified Payment Interface) apps to monitor spends easily. Also, check if your bank offers cashback or discounts if you pay through the app during online account opening. You can use these rewards if/when available and save more money.
7. Monitor and Track Your Account Periodically
Make it a habit to check your savings account at least once a week or month. Look for mistaken charges, track your interest payments, and go through any offers you can avail. Being vigilant prevents errors and helps you make the best use of your account.
8. Avoid Using Your Account as a Wallet
Your 0 balance savings account is meant for saving. Avoid making small withdrawals frequently. Not only does it ruin the saving habit, but it may also incur penalty fees (if you fall below minimum balance).
Use a checking account or an e-wallet for daily spending. Let your savings account do what it was meant to do: grow your money.
9. Use Sweep-In or Flexi-Fixed Deposit Facilities
Certain banks, especially those that offer online account opening, provide a facility where surplus money in your savings account is automatically moved to a fixed deposit. This feature helps you earn higher interest without any extra effort.
Enquire if your bank offers such a facility. It can be an excellent way to grow your money with no effort.
Final Thoughts
A savings account is not just a parking place for cash. By using the strategies mentioned above, it can help you save more, earn more, and spend well.
Start small. Setup auto-transfers. Shop for higher interest rates. Most of all, stay educated and informed. A smarter savings practice today will lead to a bright financial future.
