Different Types Of Savings Accounts And Their Benefits

12 Types of Bank Accounts in India – Features & Benefits

04^th May 2025...

If you're starting your personal finance journey, a savings account is a great first step. Knowing the different types of bank accounts available can help you pick the best one for your goals. But first, let's understand what a savings account is and how it can help you manage your money.

What are Savings Account?

Financial independence is an added basic need of every individual today. From earning to spending and saving, no one can survive without keeping track of their finances. It brings us to the need to save our hard-earned money. It is the first step towards ensuring your financial security, and that is why it requires careful planning, accurate research, and analysis of the best option to ensure your money is hundred per cent secured. However, it is also important to note that types of savings account options are available and each has distinct features.

Read on to learn about the different bank account types and how they differ.

A savings account is a type of bank account designed for individuals to deposit and store their money while earning interest over time. It provides a safe and secure place to save money and offers easy access to funds when needed. Savings accounts typically have lower interest rates than other investment options but offer liquidity and stability. They are a reliable tool for short-term financial goals, emergency funds, or accumulating savings over time.

Types of Bank Accounts You Must Know

Different types of savings account provide convenience and customisation. The most commonly picked types of bank accounts are:

Also Read: Why Opening A Multiple Savings Account Is Useful

Zero Balance Savings Account

A zero balance savings account is a perfect choice for people who want to enjoy the benefits of a savings account without worrying about maintaining a minimum monthly average balance.
This account type in bank allows customers to spend and save freely, offering flexibility in managing their finances.

Basic Savings Account

The basic savings account is the most common type, designed for individuals looking for a simple and hassle-free banking experience. It usually offers a modest interest rate and essential banking services like ATM withdrawals and online transactions. While it may not provide the highest interest rates, it is a reliable bank account type for individuals starting their savings journey.

High Interest Savings Account

A high-interest savings account provides a higher interest rate than traditional ones. It is ideal for individuals seeking to maximise their savings and earn more from their deposited funds. These types of accounts in bank often have specific requirements, such as maintaining a minimum balance or making regular deposits, but they offer the potential for greater returns.

Money Market Account

A money market account is similar to a savings account. It offers competitive interest rates and provides limited cheque-writing privileges, making it suitable for those requiring frequent funds access. These account types in bank often require a higher minimum balance but offer the advantage of higher interest and liquidity.

Certificate of Deposit (CD) Account

A CD account allows individuals to deposit a fixed sum for a specified period, typically from a few months to several years. They receive higher interest rates, making them an attractive bank account type for long-term savings goals. CD accounts offer predictable returns and are suitable for individuals with long-term plans.

Individual Retirement Account (IRA)

An IRA is a retirement savings account that provides tax advantages. It offers different types, such as Traditional IRA and Roth IRA, enabling individuals to save for their post-retirement years while potentially reducing their tax burden. IRAs are a unique account type in bank designed for long-term financial planning.

Health Savings Account (HSA)

A Health Savings Account is for individuals with high-deductible health insurance plans. It allows them to save money for medical expenses, offering tax advantages and flexibility to roll over funds from year to year. This account type in bank is triple tax-advantaged, covering contributions, growth, and withdrawals.

Education Savings Account (ESA)

An ESA, or a Coverdell ESA, is specifically created to save for education expenses. It allows tax-free growth and withdrawals for qualified educational expenses, making it an effective tool for funding school and college-related costs.

Joint Savings Account

A joint savings account enables multiple individuals, such as couples or family members, to share ownership. It promotes collective savings for shared goals and expenses, offering convenience and transparency. This type of account in bank is helpful for co-managed finances.

Online Savings Account

Online savings accounts are offered by digital banks, providing a seamless and convenient banking experience. They often offer higher interest rates, low fees, and 24/7 accessibility. This bank account type is ideal for those who prefer mobile and online banking platforms.

Also More: What Is Nominee Meaning In Banking

Specialty Savings Account

Specialty savings accounts cater to specific needs or demographics. For example, student savings account, senior citizen account, and profession-specific accounts. These types of savings account often come with tailored benefits like fee waivers or educational tools.

Salary Based Bank Account Type Explained

Usually, banks open these salary accounts at the request of large corporations so that their employees’ salaries can be organised. Employees manage the accounts themselves, but there is no minimum balance required. This account type in bank is one of the most commonly used for salary disbursements.

Choosing the Right Bank Account Type for Your Needs

Selecting the proper bank account type is crucial in your financial journey. By understanding the distinct features and benefits of various account types in bank, you can make an informed decision that aligns with your financial goals and preferences. Whether you seek simplicity, higher interest rates, tax advantages, or specialised features, a savings account is present to meet your needs.

The Kotak811 savings account is for individuals who prefer a simple banking experience. With zero balance requirements, customers can enjoy the convenience of spending and saving without the hassle of maintaining a minimum monthly average balance. Plus, the account has a free virtual debit card, enabling users to make digital transactions easily.

FAQs

1. How many types of account in bank are there in India?
Typically, banks in India offer at least 10 to 12 types of accounts, ranging from savings and salary to investment-focused and specialised accounts.

2. Which is the best account type in bank for salaried individuals?
A salary account is most suited for salaried individuals, offering zero balance benefits and seamless salary credit.

3. What are the different bank account types used for saving?
Savings accounts, high-interest savings, money market accounts, and fixed deposits are common bank account types used for saving.

4. Is a zero balance account the same as a basic savings account?
Not exactly. A zero balance account is one where no minimum balance is needed, whereas basic savings accounts may come with limited features but still require some balance maintenance in certain banks.

5. Are online savings accounts safe?
Yes, as long as they are regulated by RBI and follow standard banking protocols, online savings accounts are just as safe as traditional accounts.

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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.