Savings accounts are a safe space for you to store your money. However, they are often not completely used to their full potential. Small mistakes can cut down your financial growth to a large extent. It is important for you to understand these mistakes so that you can avoid them and extract the best out of your savings accounts:
Not looking for the Best Interest Rate
The interest rates on savings account can largely impact your growth. There are many people who do not pay importance to this aspect. They often select accounts that bring them minimal returns. Banks have varying interest rates on their savings accounts, and it is required that you compare these options.
Your savings account is greatly affected by changes in interest rates, even when they are minor. You should always look for banks that offer better yields. These can be banks with high-yield savings accounts or fixed deposit schemes.
Mixing Emergency Funds with Other Savings
Many people also keep their emergency funds in their savings accounts meant for regular savings. You can accidentally spend the money that was originally kept for unforeseen situations like medical emergencies or loss of employment.
Emergency funds should be kept separate in a different account for quick access. They should not be mixed with general savings. This will weaken your financial security and priorities. You can explore options like Public Provident Fund (PPF), Equity Mutual Funds, Tax Savings Fixed Deposits and National Savings certificate (NSC).
Not Reviewing the Account Regularly
It is possible that you open a savings account and forget to review it regularly. You can miss out on better interest rates and the introduction of bank policies. Banks often renew requirements of minimum balance, interest rates and service fees. Inactive or dormant accounts can also be frozen under guidelines by the RBI.
People who review their bank accounts regularly are also aware of possible fraud. You can suffer a financial loss if these fraudulent activities are not noticed as soon as possible.
Neglecting Reassessment and Adjustment
Your financial strategies need to be adjusted and made up-to-date after some time. Your financial status can be impacted negatively if your savings strategy is not adaptable. You can save more or move your funds according to your family size and variations in income.
You can also stay informed about new savings account options and investment possibilities available in India. Adjusting your strategies also allows you to understand the impact of inflation on your funds. You can also explore your tax-saving options for some savings accounts under Section 80C of the Income Tax Act.
Conclusion
You should choose to open savings account to securely store your money while earning interest over time. Taking care of your savings account is important for bringing in financial stability. You can avoid the mistakes mentioned above to ensure that you are utilizing your money in the best way. You can build awareness by staying informed about bank policies and interest rates. You can build a stronger foundation through effective management of your savings account.