If you are confused about savings account and permanent account, then this article is very important for you, in this article detailed information has been given about what is savings account and permanent account and what is the difference between savings account and permanent account.
What is a savings account?
A savings account is a type of bank account in which individuals deposit money left over after household expenses, and earn interest as profit on their deposits. At present, most of the people open only savings account, on which all kinds of banking facilities are also given.
What is a permanent account?
Fixed Account is a type of account in which a fixed amount is deposited for a fixed period of time, and on completion of the term, one gets the benefit of higher interest rate as compared to other accounts. Permanent account can be opened from 7 days to 10 years. Some banks open permanent accounts for even longer periods.
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What is the difference between a savings account and a permanent account?
The following are the differences between a savings account and a permanent account:-
The money saved in a savings account can be deposited at any time, whereas in a permanent account, a fixed amount is deposited only once and left for a fixed period of time.
Fixed Accounts allow investors to invest for a period ranging from 7 days to 10 years or with different tenures. While the savings account has no tenure, this account can be maintained for life.
Interest is given by the bank on both the accounts, but compared to the savings account, the benefit of higher interest rate is given on the money deposited in the permanent account.
Money can be withdrawn from a savings account at any time, while money deposited in a permanent account is locked for a certain period of time.
In case of emergency, the facility of taking loan is available on the permanent account at the normal rate of interest, while this is not the case in the savings account.
Entire amount can be withdrawn while maintaining minimum balance in the savings account. Whereas penalty has to be paid for withdrawing money from permanent account before the period.
No tax benefits are available on investment in Regular Permanent Account. However, investment in 5 year tax saving fixed deposits is tax exempt under section 80C up to Rs 1.5 lakh. Whereas, savings account offers benefits only on interest income, i.e. interest earned on savings account is tax-free up to Rs 10,000 under section 80TTA and above the limit is taxable.