How to maximise benefits of savings bank account

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 at a safe place, it also creates a relationship with the bank, which gives the investor access to different investment avenues.

• 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 sweep-in facility), insurance and other investment products can also be done through Internet banking.

• Setting up bill payments

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

• 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.

• Leveraging relationship

The banking relationship can be leveraged to avail 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, invites to special events are few of them.

• UPI payments

The bank account can be linked to payment applications like, BHIM, Googlepay or Paytm to make payments.

Points to note
To establish a strong banking relationship, one should not maintain more than two accounts.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)