Ever wondered what is saving bank account and what are the facilities that is provided by a saving bank account? In this article, we are going to talk about saving bank account definition as well as facilities.
I guess we all have a bank account and most of us have our account type as saving bank account. But the question is how many of us know what is saving bank account and what are the services provided by a saving bank account. I guess the answer is that less than 30% knows the facilities provided by a saving bank account.
So what is saving bank account?
The answer is really so simple. It is called “saving” because it helps you to save and it is called as “bank account” because it provides you banking facilities. Apart from saving bank account, one more type of account is there that is “Current Bank Account”.
With the help of a bank account, you can keep your money inside your respective bank and the bank provides you flexibility to withdraw it from any of the ATM 24×7 or from the bank office itself. You can also transfer money to someone else’s with the help of your bank account. You can either do it via cheques or Net Banking Fund Transfer.
Apart from the above two services, saving bank also provide you a small interest at the rate of 4-5% per annum.
You can also borrow loans from your saving bank account whenever you need it after going through some formalities.
With these many facilities, I can strongly say that most of the people in the world prefer to keep their money safe inside the bank and enjoys the facilities provides by the bank.
What are the facilities provided by saving bank account?
There are countless facilities provided by the saving bank account and the apart from some standard facilities, non-standard facilities varies from bank to bank.
Generally cheques are one of the most popular way to send and receive money. But nowadays, net banking is taking over the popularity of cheques.
Cheque is nothing but a paper that instruct bank to pay money from your account to someone else. You can also withdraw money from your account with the help of cheques.
Suppose you want to give money to someone and the amount, let’s say $10,000, is too big that it is unsafe to keep that much amount in your house. Now you can take advantage of one of the services that is provided by your bank. You can write a cheque by filling up your account number, amount, payee name, date etc. and hand over the cheque to the payee. Now the only job of the payee is to go to the respective bank and withdraws the money.
Standing Instruction/Direct Debit/ECS
Suppose you want to send money to someone accounts regularly after a certain time, you can do it with the help of Standard Instruction.
Suppose you have borrowed money from one of your friends and the amount is too big that it is not possible for you to send the entire money once at a time. Now there is one thing that you can do is to give instruction to your bank to send an installment every month to your friends account on the 5th day of each month. This is called as Standard Instruction. With the help of standard Instruction, you can send money regularly from your account to someone else’s account.
It is also called as Banker’s Cheque. In this case, bank will issue a cheque to the person you want to send your money to.
There is always an uncertainty in cheque that is bouncing of cheque. Suppose you have only $5,000 in your bank account and you have issued a $6,000 cheque to someone. Now if the person goes to the bank to withdraw the money, he cannot withdraw the money as you have $1,000 less in your account. So the cheque is not valid and this is basically called as Bouncing of a Cheque.
To overcome this type of problem, banks have come with a new type of solution that is called as Demand Draft.
Demand Draft are basically used by the institutions like colleges where the fees is too high and there is always a possibility of bouncing of cheque.
In Demand Draft, you also need to fill up a form. Now suppose you want to issue a DD of $100,000. As soon as you submit the form, $100,000 will be deducted from your account. This amount will not directly be sent to the payee but will be saved by the bank itself. Now if the payee wants to withdraw the money, he just need to withdraw it with the help of the DD. As it is bank’s duty to pay the money to the payee, so the payee can always be confirmed that the DD will never bounce.
The main advantage of DD is that the payee can always be confirmed that it will never bounce. This is the main reason why the colleges prefer DD over cheques. The colleges will always be confirmed that it will never bounce.
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