Savings Account vs Digital Wallet: How They Compare for Daily Use

In today's fast-paced world, both Savings Accounts and digital wallets offer convenient options for managing your finances. But which one is right for your daily transactions? In this article, we'll compare savings account vs digital wallets in terms of functionality, security, and convenience, helping you make an informed decision. So, without further ado, let's dive in!

Savings Account vs Digital Wallet: A Comprehensive Comparison

To compare savings account vs digital wallet, it is important to first review the factors based on which you can make the decision. Let's have a look:

1.Functionality: 

a. Savings Accounts:

• A savings account is a traditional bank account that allows you to deposit and withdraw money.
• It offers features like ATM withdrawals, cheque books, fund transfers, and bill payments.
• Interest is earned on the deposited amount, helping your money grow over time 

b. Digital Wallets:

• Digital wallets are smartphone apps that store payment card information digitally.
• They allow you to make contactless mobile payments via your smartphone or smartwatch.
• Some digital wallets also support features like loyalty program integration and digital ticket storage. 
  
   

2. Security

a. Savings Accounts:

• Savings accounts are typically protected by multiple layers of security, including two-factor authentication and secure encryption.
• Banks have robust security measures in place to safeguard your account from unauthorized access.

b. Digital Wallets:

• Digital banking system use tokenization to protect your payment card information.
• When making a transaction, the wallet sends an encrypted token instead of your actual card details, reducing the risk of fraud. 
  
   

3. Convenience 

a. Savings Accounts:

• With a savings account, you have access to multiple banking services like ATM withdrawals and fund transfers.
• You can conveniently manage your finances through mobile banking apps or internet banking platforms.

b. Digital Wallets:

• Digital wallets offer convenience by eliminating the need for physical cards or cash.
• With just your smartphone or smartwatch, you can make quick and contactless payments. 
   

4. Sample Calculation

Let's consider a scenario where you have ₹50,000 in your savings account and ₹50,000 in your digital wallet. Assuming an average annual interest rate of 4% on the savings account, after one year, you would earn ₹2,000 as interest. However, the digital wallet does not offer any interest on the stored funds.