This article aims to explain how passbook savings accounts work and the inherent advantages and disadvantages of opting for them.
The banking and financial services industry has undergone a lot of change in the past few years. The growth in the number of customers, branch banking, and advancement of technology have compelled many leading, as well as small banks and financial institutions to improve the quality of their services. This has simplified the managing of finances for people. With the development of Internet banking, people now prefer to view their account details by logging into their accounts online.
However, there are many people who still go by the traditional method of updating their passbook. A passbook savings account is one in which customers get a book that contains records of all their debit and credit transactions. Before we know why one should have this account, let us first understand the procedure for opening one.
Opening the Account
Before opening a savings account, you should visit different banks and financial institutions, and inquire about the rate of interest which you would receive on such an account. Naturally, you would be opening your account in a bank which offers the best interest rate on deposits. After choosing a bank, ask for an account opening form and fill all the details correctly.
The bank will ask for your social security number in the form details. You will require some initial capital to open the account and it should be at least equal to the minimum amount which the bank requires for opening an account.
Some banks may require signatures of one or two existing account holders, as a recommendation. After verifying your details and application form, your account will get activated in a few days. Most banks will also provide you with an ATM card to access your account easily.
Advantages and Disadvantages
A savings account provides you with information on money credited or debited from it. In the particulars column in your passbook, you get to know what kind of transaction took place in your account.
Such an account can be ideal for people of all age groups and especially old people who may not be too net savvy. Though accounts can be accessed via Internet, with the help of a user name and password, which you get from the bank, many people off late have been complaining about not getting the right statements or getting statements with several mistakes.
Such problems will not arise, in case of savings bank passbook which you get updated from the bank through a personal visit. In case of any discrepancy, you can immediately get the entries corrected.
The interest which you get on a monthly, quarterly, or annual basis adds to your bank balance, which is obviously a great advantage of having the account.
Simply put, there is a lot of transparency and good service received through such an account. Many banks also provide you with the option of opening a joint savings account, which can be accessed by multiple individuals.
However, there are a few cons of this type of account, which you should be aware of. These accounts are an outdated form of managing your money, in this age of Internet technology.
You need to spend time and money on traveling to the bank and getting the passbook updated, when you can get your financial details through a single click using the Internet.
Many banks require you to keep a minimum balance in your account and this can be very inconvenient for people who do not have large savings, especially some students.
If you lose your passbook, then you will have to take time out to get a new one by applying for the same.
It entirely depends on the preference of the individual, whether to own a passbook or go for Internet services. By understanding the different types of bank accounts, you will be able to open the right one, considering your needs.