Merits and Demerits of a Savings Account

A savings account is usually the first type of bank account an individual opens. It is a place to keep money for emergencies, life events, purchases, and so much more. At times, one may assume that managing a savings account isn’t worth the effort. If you feel the same way, you should ensure that you’re not overlooking the merits of holding a savings account.

Below is a list of the significant advantages and disadvantages of a savings account for you to make an informed decision.

Advantages

Interest on savings

The bank pays you interest every quarter on the amount in your savings account. This gives you a chance to earn from the idle money in your account.

Safety

A savings account is one of the safest forms of investment. When you deposit your money, you get to earn decent returns minus the risks, as compared to other investment options.

High liquidity

A savings account is highly liquid as it allows you to access and use your funds as and when you like. There is no lock-in period or a cap or penalty on the number of transactions or withdrawals that you can make.

Debit card with added benefits

The bank offers you a debit card in the process of bank account opening. You can use this debit card to withdraw cash from ATMs. You can also make purchases directly with the card. In addition to this convenience, banks offer rewards and cashback when you use the debit card anywhere. You can enjoy rewards on everything- from refuelling and movie tickets to dining and more.

Disadvantages

High liquidity

The easy access to funds can prove detrimental to your savings if you’re an impulsive spender and do not keep a monthly budget.

Fluctuating interest rates

The interest rates of banks fluctuate with time. There, the value of the returns from a savings account is not fixed.

Minimum balance

You need to maintain a certain balance in the account. If you cannot, you may be penalised by the bank.

As you may notice, the advantages of a savings account are more than its disadvantages. Also, the disadvantages can be easily overcome by planning and managing your finances well.

IDFC FIRST Bank offers you a savings account with one of the best interest rates in the country. A few reasons why you should opt for it are listed below.

Paperless digital account opening

You can easily open a savings account online. All the formalities will be completed digitally. The KYC process will also be conducted digitally. This spares you the hassle of visiting the branch.

High purchase and withdrawal limit

As of 2021, the account has a purchase limit of ₹6 lakhs and daily ATM withdrawal limit of ₹2 lakhs.

Complimentary Air Accident Insurance Cover

The account comes with an air accident insurance cover of ₹ 1 Crore.

Unlimited cash withdrawals

You can withdraw money multiple times from ATMs for free using Visa Signature Debit Card.

Please Note: These features are subject to change with time. Visit our website or download IDFC FIRST Bank Online banking app to know more details.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.