Every individual must save money to cater to their personal needs efficiently. Regular fund saving is a good habit that helps to manage your personal finances. This is where a savings bank account plays a significant role in helping to save money in a secured manner. It is also a popular choice among most other tools for many individuals.
However, the rise of digital banking has introduced the digital savings account for a more convenient experience. In this article, we’ll look into the differences between a digital savings account and its traditional counterpart.
What are Digital Savings Accounts?
As per savings account definition, a bank account designed for saving money while earning interest on deposits, provides a means to accumulate funds. In contrast, a digital savings account is exclusively operated and maintained online. It provides a convenient and readily accessible avenue for individuals inclined towards digital banking, allowing them to save and manage their finances anytime and anywhere.
Features
- Interest rates surpass those of standard bank accounts.
- Online money transfers incur zero charges.
- Payments are facilitated via direct debit.
- Online booking is available for recurring deposits and fixed deposits.
- ATM transactions are exempt from fees.
- Complimentary travel and accident insurance coverage are included.
What is a Traditional Savings Account?
A brick-and-mortar bank or financial entity provides a conventional savings account. Opening such bank account number necessitates visiting the bank branch, where you must complete the application, submit the required documents, and undergo verification. After activating your online savings account, you can deposit and withdraw by visiting the bank branch using an account payee cheque. Additionally, transactions can be conducted using a passbook or ATM card.
Features
- Placing a substantial sum in a cash section or a readily accessible bank account number yields a higher interest rate.
- You will receive the entire sum deposited in your regular savings account upon completing the specified term.
- Nevertheless, missing a payment or making withdrawals will decrease your rate; thus, consistent monthly savings are essential.
- You’ll encounter variable and fixed-rate options while searching for standard savings accounts.
Highlighting the Key Differences Between a Regular and Digital Savings Bank Account
Here’s a comparative study between a regular and digital savings account:
| Feature | Regular Savings Account | Digital Savings Account |
| Account Opening Process | Typically, it requires visiting a bank branch or applying online with physical documents. | It can be opened online or through a mobile app with minimal documentation. |
| Accessibility | It is accessible through branch visits, ATM withdrawals, online banking, and mobile banking. | This is primarily accessed through online or mobile banking; there is limited or no physical branch access. |
| Transaction Limits | This may have limits on the number of transactions or withdrawals allowed per month. | It often offers unlimited or higher transaction limits, especially for digital transactions. |
| Interest Rates | Interest rates may vary and can be relatively lower. | Sometimes, it offers higher interest rates due to lower operational costs. |
| Fees and Charges | It may have account maintenance fees or transaction charges. | It generally lowers fees or fee-free accounts due to reduced overhead costs. |
| Customer Support | It offers in-person assistance at branches and call centres. | It relies heavily on online chat support, email support, and automated phone assistance. |
Conclusion
There are notable distinctions between digital and traditional savings accounts regarding account opening procedures, eligibility criteria, KYC processes, and debit card and account opening fees. Digital savings accounts are recognized for their convenience, accessibility, and user-friendliness, yet they might not provide the same degree of security and customer service as conventional banks when you open savings account. Ultimately, deciding between a digital savings account from IDFC FIRST Bank or a traditional one hinges on your individual preferences, financial objectives, and lifestyle.
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