What is Online Savings Account, And How Does It Work
Blog Outline
In the era of digital finance, online savings accounts have become increasingly popular for individuals seeking a secure and convenient way to manage their money. This article will help you learn what online savings bank accounts are, how they work, and their benefits.
What Is An Online Savings Account?
An online savings account, or digital one, is entirely managed online. It has a 100% digital (paperless) opening process. These accounts are often provided by fintechs partnering with well-known or small finance banks. Like traditional banks, online savings accounts are regulated by the Reserve Bank of India (RBI) and follow all the rules set by regulatory authorities. Interested in an online savings account? Learn about the easy process for opening an online savings account.
How To Open An Online Savings Account?
Opening an online savings account is a breeze. Begin by reviewing online savings account interest rates and customer support details. Ensure the bank is mobile or web-friendly. Download their app or form, share personal information, and provide ID. Complete a speedy Know Your Customer (KYC) process through e-KYC or video KYC. Once finished, you’re all set to start using your online savings account.
Once you pick a bank, download their app or form from the website. Include full name, age, income source, average yearly income, employment details, and address. Additionally, provide your identity proof like Aadhaar for a smooth process of bank account opening online.
Afterwards, you must complete some Know Your Customer (KYC) steps. The process is simplified with e-KYC/video KYC. You may share your Aadhaar-OTP during biometrics or send a short video to verify your identity for a swift bank account opening online. It only takes a few seconds.
Once you finish this, you can use your online savings bank account immediately.
Eligibility Criteria for Opening an Online Savings Account
The eligibility criteria for opening an online savings account are set by the partnering bank and they are quite similar to that of a traditional bank. The most common ones are:
- Age: The customers interested in opening an online savings bank account must be at least 18 years of age.
- Nationality: Although most banks require their customers to be resident Indian citizens, many of them allow non-resident Indians (NRIs) as well as foreign nationals to open an online savings account with them.
It’s recommended that you check these criteria with your banking partner beforehand.
How an Online Savings Bank Account Works
An online savings account, whether at a bank or credit union, serves as a place to deposit money, work towards financial goals, and earn interest. Opting for an online savings bank account eliminates the presence of physical branches, offering the advantage of managing your account conveniently through a computer or smartphone from anywhere. The account application process involves providing personal details such as name, date of birth, address, phone number, and Social Security number. For joint accounts, information for each account holder is required. After filling out the application, you select your account type, fund the account, and set up login details. Depositing money is flexible, allowing for direct deposits, transfers from other accounts, or mobile app check deposits. Withdrawals can be done through transfers or wire transfers, but fees may apply for the latter. Overall, online savings accounts provide accessibility and ease through digital platforms.
Benefits of an Online Savings Bank Account
- 100% Paperless account opening: An online savings account offers the convenience of opening an account without leaving your home, completing the process in just a few seconds with no paperwork involved.
- Higher interest rates and zero balance account: Traditional banks often mandate a minimum monthly balance from customers. Fintechs, operating with fewer resources and avoiding the overheads of physical branches, extend benefits to users. This includes better interest rates on online savings account balances and the possibility of zero-balance accounts.
- Impressive UI/UX: Since fintechs are basically technology companies, they focus on providing a seamless banking experience with brilliant UI/UX for their users.
- Safety and security: Fintechs offering these accounts place significant importance on encrypting user data and ensuring continuous monitoring to protect your accounts. They are as secure, if not more so, than traditional banks.
- Customer support: Since the core idea is to provide a hassle-free banking service, many online savings bank accounts come with a 24×7 in-app or toll-free calling facility.
Online savings accounts have revolutionised the way individuals save and manage their money. With the convenience of digital access, competitive interest rates, and a range of features, these accounts offer a modern and efficient solution for those seeking to enhance their financial well-being. Embracing the benefits of online savings accounts can empower individuals on their journey towards financial stability and growth.
Frequently Asked Questions
Many online savings accounts have lower or no minimum balance requirements, providing flexibility to a broader range of individuals. This allows you to start saving without worrying about maintaining a substantial balance.
The bank pays interest on the average daily balance in your savings account. The interest is calculated regularly (usually monthly or quarterly) and deposited into your account.
No, interest rates can vary significantly among banks. It’s essential to compare rates across different institutions to find the savings account that offers the best return on your money.
Yes, online banks often provide higher interest rates compared to traditional banks. This is due to their lower operational costs, allowing them to pass on more favorable rates to customers.
