What is a Saving Account?
A savings account is an interest-based deposit account which a user holds in a bank or any other another financial institution that provides savings account interest rates. This bank or financial institutions may or may not limit the number of withdrawals you can make from your savings account every month. Usually, you need to maintain the predefined savings account minimum balance monthly.
A bank account can also be called as a virtual vault created by the bank on the request of an individual, in which you can securely and safely store a virtual representation of your money.
In a broad perspective, an individual can maintain the following types of account with a bank, they are:
Why do People Generally Have More Than 1 Savings Account?
There are many pros and cons of saving accounts. It mainly depends on your spending habits and the funds you can save in a particular time frame.
If you intend to have multiple savings accounts, it can be done quickly with an instant digital savings account that can be opened within minutes. Doing this might make sense for you for these reasons:
The main reason you may open more than one account is to keep track of your savings.
For example, if you want to save some funds for emergency, funds for a summer vacation and down payment for a house. You can open three individual accounts and keep an eye on reaching towards that goal faster.
In case you have an emergency, you could keep some of your funds on a lock-down, so you can use it when you need it the most. Keeping an emergency fund in an account which is easily accessible will allow you to obtain the funds without any hassles and the remaining funds can be tied to other short and long-term targets.
Having a high balance in an account will attract unwanted attention. Plus, insurance doesn’t cover high account balances. Having your money spread out in various accounts decreases the risk of exceeding the insurance limit.
Even though Insurance reimbursement is available if a bank goes under, this reimbursement could take time till you can access your funds. Hence having your money in another financial institute will make sure you have cash when you need them the most.
It can be possible you want a bank with an ATM close to your home or workplace, online banking often offers better interest rates, and some institutions offer you a bonus for opening an account. You may be able to take full advantage of the perks from several banks or institutions if you begin multiple accounts.
You can try out various banks and credit unions for a while to measure their levels of service.
Saving accounts typically have limited withdrawals per month and can range from 4 to 6 or more. If you have three such accounts, it gives you the option to withdraw up to 18 times a month!
Reasons You May Not Want Multiple Bank Accounts
Even though there are various advantages in having Multiple Savings Bank account you may still want to keep all your savings in one place rather than having them in multiple accounts.
Many savings accounts require you to open an account with ₹1,000/- or more or need you to maintain a minimum balance to receive interests. Bank accounts like Kotak 811 give you the privilege to open an account in minutes and have no penalties for a zero balance.
Even if you prefer multiple bank accounts, you may have to pay to keep them with one financial institution, as some banks may provide lower interest rates on loans others may reduce fees for customers with multiple accounts.
Even though the interest paid is low, some banks pay a higher interest rate to customers who have a more substantial balance stored in their accounts. So, spreading your money across many accounts may keep you from earning a higher interest rate.
If you have ₹5,000/- allotted to save each month or you receive a bonus gift, you will have to decide whether to put it all in one account or split them into all your accounts. But if you have one account, you will not have to decide immediately how to save or split the money.
If you get your funds through one paycheck, it may be too much to move the money in different accounts and keep track of the same.
If you are not so perfect in keeping track of your finances, it is advisable to have just one account as multiple accounts may get confusing for you to handle your money correctly.
Some banks charge a fee for their customers, especially on Saving Accounts with a low balance. Hence you need to keep a track so that you do not overpay by dividing your funds.
If you are highly organized with your savings and investments and want to save your funds in multiple savings accounts for various needs and want to separate from each other, you may find it profitable by opening a saving account with Kotak Mahindra Bank as you can have a savings account that earns interest up to 6% p.a. There are various choices of options you can choose from to meet your goals. Kotak Mahindra bank has no transactions or monthly fees which make it the best way to save money and earn interest. This will make sure you do not miss out on the perks of having a high balance and will eliminate the fees for maintenance and transactions.
This makes Kotak one of the best savings account in the market for your financial decisions. So why don’t you compare and check the interest rates and fees of all the financial institutes in the market and make your final decision?