The primary purpose of having a savings account is to provide a safe house for money and at the same time earn interest on it. However, it also helps in creating a relationship with the bank, which gives the account holder access to different investment avenues.
For most account holders, opening a savings account is their first interaction with the banking and financial system. While most know it as a safe avenue for funds, a savings account can be used for various different purposes. As account holders stay unaware of it, they do not get to use it to its full limits.
Start investing
A savings bank account can be used to set up SIP (systematic investment planning) for investing in mutual funds. One can also make systematic transactions like opening a bank RD (recurring deposit) for a particular date of the month and a stipulated time period.
To invest in securities, account holders can also open trading and Demat account. Additionally, investment in FD (using the sweep-in facility), PPF (public provident fund), insurance and other investment products can also be made via net banking. Most banks now have their mobile apps too, using which almost all banking transactions can be done.
Make bill payments
Using the savings bank account, account holders can make third party utility bill payments. Such as DTH bills, mobile bill payments/recharge, tax payments, loan EMIs, along with insurance premium can be paid safely and securely. Account-holders can also get a quick snapshot or financial dashboard of their all investments mapped to the bank account, either through net banking or in their mobile apps.
Income tax
Both the income earned by an individual as well as the expenses incurred are recorded in the savings bank account. With a savings bank account, it is easy to trace how assets have been funded from a matching income. The bank also provides an annual bank statement, which provides a record of the total income earned including earning in the form of salary, gift, interest, rent, profit, dividends, etc. hence its a crucial document for income tax compliance.
UPI payments
New-age digital payments, UPI payment apps like BHIM, Google Pay or Paytm can also be linked to the bank account. Additionally, these can also be used to pay the account holder’s bills and even transfer money to other bank accounts easily.
Leverage relationship with the bank
Note that, to establish a strong banking relationship, try not to maintain more than two accounts, as in that case if any of them remains inactive, it will not go down well in your customer records with the bank.