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Mutual Funds | 24 Sep 2021

Rules To Be Followed By Savings Account Holders

The savings account is the most basic account you can open in any bank according to your needs and preferences. You can save a portion of your earned money in a savings account by depositing it in your account and keeping it safe in the bank. This frees you from the task of spending more and keeping it safe by hiding it. You can withdraw your cash when the time comes for your needs.

Some people might be confused or frightened about how they can withdraw their money from their bank accounts. So a relief for those people is that you can withdraw your money anywhere and anytime and use it for your emergency needs.

So the benefits of a savings account can be seen, and you should open your own savings account as soon as possible. You can follow the online procedure of opening an account with your phones or laptops. These accounts, along with providing you the benefits of saving your money with security, allow you to earn. Opening savings accounts in reputed banking institutions will benefit you with attractive interest rates with which you can increase your saved amounts.

People from all walks of life have a minimum of one saving account to meet their banking requirements. People who earn on a salaried basis or have a business of their own; everyone is required to open a savings account. But everything comes with limits that need to be followed strictly.

In order to control the crime of black money, tax experts have imposed certain limits on the deposits and withdrawal of money in every bank account, including the savings account. So you as an account holder need to be aware of these limits to keep you out of any penalty or trouble.

Limits in a savings account

As told above about the control on black money and increasing the tax rates, the government has made it mandatory for all the banking institutions to keep them updated with all the banking transactions. So the banks being under the control of the government have to submit a Statement of Financial Reporting (SFT) when a person transacts money exceeding the limits prescribed by the government. These transactions include every type of money use like withdrawal, deposits, investing in shares, debentures, and any other area or means that provides for the use of money in it.

The exceeding amounts at which the banking institutions are required to report the governments is Rs 10 Lakh or more. This amount includes transactions in the account holder's every account. After reporting to the government about the exceeding amounts, the tax officers inquire the person about his transactions and ask for the receipts of money use. If the person avails the tax officer with appropriate transaction receipts, the officer's work is done, but further investigation is done if there is no proof of money use. This helps the tax officer to monitor the black money and punish the people committing these crimes.

This is the main reason that has caused banking institutions to impose limits on the cash transaction of their customers. Now we will brief you with the detailed limits in a savings account.

Maximum depositing limits in a savings account

An advantage for savings accounts holders is that there are no limits on the money you save in a savings account. No law imposes restrictions on account holders to save their money. The banks can deposit any amount of money with them.

If you face any restrictions on your saving amounts, those are only imposed by your chosen banking institutions. Whenever a person deposits money, the banks are in profit. They can use your money for lending purposes and earn high rates of interest with your money. So it is unlikely to face any depositing restrictions in a banking institution. However, if any bank poses restrictions on your deposits, you are free to transfer your amount to another reputed bank.

If you have any trust issues with the security of your money in your chosen bank, you can anytime change your bank and open multiple savings accounts in other reputed banks. This will help you experience different interest rates of various banks and also provide you security with portions of your savings.

The more you deposit, the more you earn

An important thing that every account holder needs to know is that every amount of money you deposit in the bank works as a profit maker for the banking institutions. They use your money as loans, and by lending your money to other needy people, banks earn high rates of return and earn double the amount they pay you as interest.

So if you have a good flow of income and you save those amounts in the bank, make sure to choose an account that provides you high rates of interest rather than using them for their benefits. Here was a brief on the savings account limits and how banks use your money for their benefits. Now is the turn to inform you about the withdrawing limits imposed by different banks.

Withdrawing limits in a savings account

As an account holder of a savings account, you will experience restrictions on the withdrawals of your deposited money. Withdrawings lead to reducing the in-hand money of the banks, which they use for their own benefits. So as no one wants to lower their profits, banks impose certain limits on drawings so that they can cover their losses and keep the withdrawings specific.

• Banks allow the account holders a withdrawal of six times a month. This limit is countable on the transactions such as bill-pay transfers, over-drafting facilities, and debit card transactions.

• The government insures the account holders with their deposited money to an amount up to Rs 2, 50, 00 per depositor.

The reason behind these limits

As told above that the amount deposited by you works as in-hand money for the banks. They regulate the money deposited by their customers in loans, credits for homes, property and earn high rates of return from them. Your money is the only purpose that serves as income for these banks. However, at the time of with drawings, the in-hand amount of these banks decline, which leads to loss for these banks. So they impose restrictions on the withdrawing limits on your own money so that they can keep the money reserved for regulation.

However, a bank holds a small portion of every depositor's money so that no problem arises when the account holder is in need of his money. This is how a bank works and lends money to people as a mortgage. Although not inclusive in the limits imposed by banks, you can continue money flow with the following transactions.

Transactions that don’t have withdrawal limits

Mainly, people open savings accounts to save their money for large bills, irregular paying, and many other transactions that require large amounts of money. But the withdrawing can prove to be a hindrance in their way. The limits of six withdrawals can prove to be very low for these people. So here are some tips you can follow to exceed your withdrawing limits and use your money for your needs.

• Visiting a teller person is not included in the withdrawal limits, so you can use it for exceeding the withdrawal limits.

• Cash withdrawal from the ATM can prove to be an excellent way to increase the number of your withdrawals.

• Ask your bank account to send a check as it does not come under the withdrawal limits.

• If you are in need of large withdrawals, you can transfer your amount of savings into a checking amount. The transactions that occurred under the checking account will not be included in the withdrawal limits.

These methods are considered inconvenient for the withdrawing, so they are excluded from the six withdrawals allowed by the bank in a month. However, if any of this doesn't work for you, you can undergo the charges imposed by the banks when you exceed the six withdrawal limit in a month.

You can use the Money Spring tool for other tips that can help you with the withdrawal limits.

Money Spring

The Money Spring professionals can help you with the managing of your account. Many people are unaware of the deposit and withdrawal limits and face problems like income tax and other charges imposed by banks. The experts hired by Money Spring help their clients with the best-suited solutions for any situation.

Final thoughts

We hope that you have learned about the reasons for limits imposed by banks and how to exceed these limits with our collected information. Also, you are suggested to deposit your valuable money in reputed banks and the ones who provide you attractive interest rates rather than using your money for their benefits. You have to be very careful with these transaction limits to keep yourself out of the income tax officer's radar and other penalties imposed by banks. You can get the best and the most accurate help with access to the Money Spring tool.

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