There are several accounts that a bank offers to safe-keep your money as well as to provide you with interest. A saving account is one such account that is used by almost everyone to get returns on the money they have saved. With digitization reaching banks, now you can get a digital savings account. Wondering what this account is? Don’t worry! We are here to tell you.
Below we have made a guide to digital savings accounts. So, read on to find more about what these accounts are and what their benefits are.
What is a digital saving account?
A saving account allows you to deposit your money and save it for when you need it later. Over time, the bank provides you with interest that increases the amount you have saved with the bank. Moreover, you can also choose to withdraw your funds whenever you need them. Thus, a savings account is known as one of the most liquid investments.
A digital savings account works the same as any other savings account. However, all your transactions take place on your mobile phone or any other digital device. There may be some other additional benefits too of a digital savings account than a regular one.
Further, there are also different types of savings accounts. The three most common types of savings account are:
- Deposit Savings Account: These are also known as transactional savings accounts and are the simplest way to store your money safely while receiving interest.
- Money Market Accounts: These work much like regular savings accounts as you receive interest over time after you have deposited money. However, these often require a much larger money deposit which may need to be maintained. Consequently, the interest rates of these are also higher.
- Certificate of Deposit: These have the lowest liquidity out of all the three types of savings accounts. However, they have the highest interest rates. To save money in a Certificate of Deposit, you have to purchase the same for a maturation period and withdraw after that.
Why do you need a digital savings account?
For many people, a savings account works like an emergency fund that they can use when needed. Alongside providing this benefit, there are several other additional benefits provided by a digital savings account. These are:
- More secure: A digital savings account offers a higher level of security and safety. Since all of your transactions are taking place through a safe and secure server, you don’t have to worry about the safety of your money. Along with that, you are also protected against data theft and other things.
- Easily traceable: Since all your transactions are taking place on one platform, which is constantly with you, i.e., your phone, you can easily track all your transactions. Moreover, many of these accounts allow you to look at your transaction history. As a result, you are also provided with an easy way of managing as well as overseeing your spending habits.
- Higher interest rates: As mentioned above, there is interest that is provided by your bank on the amount you have invested in your account. How much of this interest you get depends upon your interest rate. Most banks offer higher interest rates on a digital savings account than a regular one. Therefore, many times people also call digital savings accounts high-yield savings accounts.
- More accessibility: You can both invest funds or withdraw them through a single tap on your mobile phone. Thus, these accounts offer more accessibility as you do not have to physically visit a bank to withdraw or deposit funds; you can just do it from your phone.
Who can open a savings account?
Any individual can open a savings account. The requirement for the same depends upon the country where you come from. For instance, Indians are required to fill application forms and submit KYC documents to open a digital savings account as well as a regular one. Therefore, you should ask your bank for their requirements and get that done.
That was all! Now you know everything there is to a digital savings account. While you are opening a savings account, make sure you read the terms and conditions offered by the bank and then sign any documents. Happy saving!