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Savings account has more benefits than just saving money: Know more

January 18, 2024
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Have a savings account? Know its benefits​

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Have a savings account? Know its benefits​

The first step in a financial journey typically starts with opening a savings bank account. While the main purpose of a savings account is to deposit money in a safe place, it also creates a relationship with the bank, which gives the investor access to different investment avenues.
Text: CIEL

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Making investments
The savings bank account can be used to set up systematic transactions. An SIP or a bank RD can be set up for a particular date of the month for a certain period. A 3-in-1 investment, trading, and demat account can be opened by the savings bank account holder to make investments in securities. Investment in PPF, FD (using a sweep-in facility), insurance, and other investment products can also be done through Internet banking.

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Setting up bill payments

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Setting up bill payments

The savings bank account works as a person’s cash management system. Third-party utility bill payments, tax payments, loan EMIs, and insurance premiums can be paid seamlessly. Many Internet banking portals provide a quick snapshot or financial dashboard of the customer for all investments mapped to the bank account.

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Tax compliance
The savings bank account records the income earned by the individual, as well as expenses carried out. It is easy to trace how assets have been funded from a matching income. The annual bank statement provides a record of the income earned (by way of salary/gift/dividends/interest/rent/profit etc) and hence becomes a key document for income tax compliance.

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Leveraging relationship

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Leveraging relationship

The banking relationship can be leveraged to avail of other benefits offered by the bank, depending on the size of the account. Credit cards, pre-approved loans, overdraft facilities, discounts on certain purchases, waiver of service charges, and invites to special events are a few of them.
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UPI payments
The bank account can be linked to payment applications like BHIM, Google Pay, or Paytm to make payments.

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Key point to remember
To establish a strong banking relationship, one should not maintain more than two accounts.

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