Advantages and Disadvantages of Savings Account - ICICI Blog (2024)

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Advantages and Disadvantages of Savings Account - ICICI Blog (1)

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Most people when selecting an investment option, only focus on the advantages related to the option. But to make an informed investment decision, it is very important to know the good as well as the bad of the option you select.

While the advantages of savings account are plenty, there are also a few drawbacks too that you should know about before opening a new account. Some of the most important advantages and disadvantages of savings account are discussed below-

Advantages

1. Earn Interest

A savings account helps you earn interest on the deposited amount. To attract new customers, banks now offer higher interest rates and a host of other benefits such as discounts on locker rentals, unlimited ATM transactions, and more. Moreover, some of the banks also offer many different types of savings account to meet the different needs of the customers.

2. Safest Investment Option

One of the biggest advantages of saving account is unlike most other investment options, a savings bank account does not invest your money but still offers modest returns. All you need to do is to deposit money in your savings account to take advantage of this feature.

3. Minimum Investment Amount

Browse through the different investment options and you’ll see that a savings account is also the most affordable. You are simply required to keep the minimum balance in your account to keep earning interest. This minimum deposit amount can be different for every bank.

Disadvantages

1. Interest Rates Can Change

One important disadvantage of a savings bank account is that the interest rates offered by the bank are variable. This means that the bank has the right to make changes to the interest rate. While the changes are generally minimal, it is possible that the interest rate of a savings account now can be lower 6 months down the line.

2. Easy Access

While easy access to funds is seen as one of the most important features of savings account, it can also work as a disadvantage for some people. As these accounts allow you to access your funds anytime you like, people are more tempted to spend. This can make long-term savings challenging.

3. Minimum Balance Requirement

When you open a savings bank account, you’ll be required to maintain a minimum average balance in your account. If you fail to maintain this balance, the bank charges a penalty for the same. So, before opening an account, make sure that you check the minimum balance requirements of the bank and always maintain this balance to avoid the penalty.

Is a Savings Account the Right Option for You?

Now that you know the savings account advantages and disadvantages, you can now easily decide whether or not it is the right investment option for you.

If you plan to go ahead with the savings account, make sure that you check the interest rate offered by the bank and other terms and conditions to enjoy a hassle-free experience.

DISCLAIMER

The contents of this document are meant merely for information purposes. The information contained herein is subject to updation, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment. Any investment decisions that may be made by you shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient's own risk. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith by lClCl Bank and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith and sources considered reliable by lClCl Bank. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. 'lClCl ' and the 'I-man' logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.

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Advantages and Disadvantages of Savings Account - ICICI Blog (2024)

FAQs

Advantages and Disadvantages of Savings Account - ICICI Blog? ›

ICICI bank is one of the leading private sector banks in India, and is generally considered safe for banking services. Here are some reasons why it is considered safe: ICICI Bank is regulated and supervised by the Reserve Bank of India (RBI), which is the central bank of India.

What are the advantages and disadvantages of savings accounts? ›

Savings Account: Pros & Cons
ProsCons
High interest earnings will grow your money exponentially over time.Limited to certain types and amounts of withdrawals and transfers.
You can withdraw at any time during your bank's business hours.May require a minimum balance to avoid paying fees.
2 more rows

What are the benefits of Icici savings account? ›

Features of ICICI Bank Savings Accounts:
  • Offers 24x7 internet banking facility.
  • Provides touch banking on Sundays through self-service branches.
  • Allows easy financial planning for Public Provident Fund, My Money, and Atal Pension Yojana.
  • Enable user to choose their preferred account number.
  • Provides systematic saving option.

What are 3 disadvantages of saving? ›

The disadvantages of using personal savings:
  • You're limited to what you can afford: your savings may only get you so far.
  • It's risky to spend all your savings: you might need your savings for a personal emergency.
  • Your responsibility for success: having more people behind your business could lead to more success.
Mar 15, 2024

Is ICICI Bank safe for savings account? ›

ICICI bank is one of the leading private sector banks in India, and is generally considered safe for banking services. Here are some reasons why it is considered safe: ICICI Bank is regulated and supervised by the Reserve Bank of India (RBI), which is the central bank of India.

What are the pros and cons of online savings accounts? ›

Despite the rising virtual presence of traditional banks, online-only competitors still offer some clear advantages for consumers.
  • Better Rates, Lower Fees.
  • Better Online Experiences.
  • No Personal Relationships.
  • Less Flexibility With Transactions.
  • The Absence of Their Own ATMs.
  • More Limited Services.

What is the risk of a savings account? ›

The interest rate on savings generally is lower compared with investments. While safe, savings are not risk-free: the risk is that the low interest rate you receive will not keep pace with inflation.

Which is best Icici savings account? ›

Privilege Savings Account:

Privilege Savings Account provides a wide range of exclusive benefits to the Account holders such as discounts on locker facilities, unlimited withdrawals, a banking assistant, priority services at select banking zones and so on.

How much icici give interest on savings account? ›

3% – 3.50%

Which type of Icici account is best? ›

The ICICI Insta Save account can be opened by individuals aged 18 and above, and a minimum balance of ₹10,000 must be maintained. While ICICI also offers a regular savings account, the Insta Save account is preferred by customers and also promoted heavily by ICICI.

What are two pros and two cons of a savings account? ›

Three advantages of savings accounts are the potential to earn interest, it's easy to open and access, and FDIC insurance and security. Three disadvantages of savings accounts are minimum balance requirements, lower interest rates than other accounts/investments, and federal limits on saving withdrawal.

What is not an advantage of a savings account? ›

Answer and Explanation: C) Protections against inflation is not a benefit of a savings account. Inflation is a decrease in the value of cash over time due to financial and monetary policy that means that prices of goods and services increase faster than the value of money.

What is not a benefit of saving? ›

Answer and Explanation:

A savings account does not offer the benefit of regular and unlimited withdrawals to the account holder like a current account. There are federal restrictions that limit the number of times an individual or a company can withdraw money.

What is the minimum balance for an ICICI savings account? ›

Minimum account balance: The minimum account balance of ICICI savings accounts is INR 10,000 in metro and urban cities. Also, for semi-urban locations, the minimum balance is INR 5,000 and INR 2,000 for rural locations. Fund Transfer: Transferring funds with ICICI bank is easy.

Which bank is better, HDFC or ICICI for savings accounts? ›

HDFC Bank has maintained stable return ratios with its return on asset (ROA) remaining between 1.8 percent and 2.1 percent for the last 14 quarters. In contrast, ICICI Bank has shown significant improvement in its return ratios, achieving its best-ever ROA of 2.39 percent in Q4 FY 23.

What is the average monthly balance of Icici savings account? ›

Regular Savings Account

For individuals who plan to open this account, their average monthly balance should be Rs. 10,000 in metro and urban locations, Rs. 5,000 in semi-urban locations, Rs. 2,000 in rural locations and Rs.

What are 3 benefits advantages of saving your money at a bank? ›

Saving at a bank helps you manage your finances in a more organized and planned manner. Having a savings account lets you separate funds used for daily needs from savings funds. You can also check your savings funds' incoming and outgoing flows through neatly recorded transaction history or account mutations.

What are two 2 disadvantages of putting your money into savings accounts compared to investing? ›

  • Lower potential returns compared to investing.
  • Potential for savings accounts to fail to keep up with inflation, eroding your purchasing power over medium- and long-term time horizons.

What are the advantages and disadvantages of a checking account? ›

The primary benefit of checking accounts is the ability to store money you intend on spending, either through debit card transactions, checks, or cash withdrawals. However, the downside is they typically don't pay interest.

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