A savings account is one of the simplest types of bank accounts. It allows you to store cash securely and earn interest on your money. There are several banks in Pakistan that offer different types of savings accounts that you can choose from based on your need.
With that in mind, let us give you a rundown of what savings accounts are, why they exist, and how you can manage one for yourself:
Savings accounts are generally available with different banks. For example, if you walked into National Bank today or Habib Bank, you would be able to open different types of savings accounts like Premium Saver (National Bank), and the Daily Munafa Account offered at various banks for example HBL. There are always three steps to a savings account, the first to open an account in the bank of your choice, the second to deposit your savings into that account, and the third to receive interest or profit on that money. Savings accounts are not just a benefit to you in terms of profits or the interest that you receive, but also to the bank because they can loan that money out to businesses and individuals. This cycle of cash then fuels the economy.
The interest rates being charged by the banks on the loan amount are a bit higher than the one being paid to customers on their savings account. Banks also have an opportunity to earn profits on the loans being provided to their customers. Savings accounts are certainly very useful for people because of the protection they receive in case of any emergency or any other important need. The best part of a savings account is that the customer can withdraw the amount at any point of time from the bank.
While you may wonder what types of savings accounts you could usually go with, we have broken them down for you to understand them a little better:
- Regular Savings Account
The facility of maintaining a Regular Savings Account is usually offered by every bank. Regular Savings accounts are easy to maintain and are considered to be worry-free. However, each bank has a different minimum balance and opening balance requirement, therefore, consider these requirements before you opt for opening a savings account in the bank of your choice.
- Certificates of Deposit (CDs)
Certificates of Deposit (CDs) are considered to be a popular savings option and may function exactly in the same way as a savings account, except that it won’t be as easy to withdraw your principal funds from the account or certificate. You can earn interest periodically during the lifetime of your investment. Moreover, there are different types of certificate options to choose from, that offer different rates of return for your investment. The disadvantage here is that you would find it difficult to take out your investment in case you need funds to cover an expense. Certificates of Deposits lock your investment for a certain tenure or duration and breaking down an investment results in an extra charge against the profit or interest earned.
Even then, why would you need a savings account in the first place. There are several reasons because of which savings accounts are needed. Let’s evaluate the reasons which you should consider:
- Unforeseen spending
Ever faced an emergency expense that your insurance or savings are unable to cover and you end up struggling to cover that expense? Even as simple as falling sick and finding the need to be hospitalized can be a major expense. Having savings that you can use in such a case can be a blessing!
You can’t just save all the money under your mattress. Law and order, and security of your house and family dictate that you find a more viable option in saving your hard-earned money. Savings accounts are one such option. You may not find a savings account that would give you the greatest rates of returns in today’s market, but it is a superb option if liquidity is a requirement.
The process to open a savings account in Pakistan is actually quite simple. Documents that you would need include an ID card (CNIC is a general requirement), photographs, and filling out a bank account opening form. A few signatures, a Zakat exemption affidavit, and a minimum deposit, and you’re all done! A minimum amount of balance is also sometimes necessary for opening a savings account depending on the bank. Make an informed decision when it comes to finding the right bank, read more here to choose the bank that works for you.
Savings accounts can really help you to be in control of your cash! With a savings account, the idea is to keep your money in the account, where it can grow and you can have ready cash available to spend in case you need it.
In case of emergencies or bigger expenses that you may need to undertake, you can always look into obtaining a personal loan. Compare personal loan options and see which bank has the offering that fulfills your need.