- How should you decide on choosing your Saving account?
- Are you aware of the pitfalls while choosing your saving account?
Opening a saving account is never a mind-boggling experience. After all, most of the savings accounts of different banks look almost similar (mind the almost!). This “almost” greatly depends on where you choose to open your savings account online or offline. The interest rates may be comparable, as some banks do provide higher than average rates.
Noteworthy thing is that there are 31 banks which are offering more than 200 types of savings accounts catering to the various requirements of each customer. But, there are some important features which are to be cross-checked before you finally Zero-in on the account and bank where you want to open the account. You need to be clear on the purpose of opening this account and the possible banking facilities you wish to use.
Purpose of opening a Savings Account
When you think of opening a saving account, it is probably to fulfill below-listed objectives –
- Save Money
- Pay Bills
- Keep an eye on transactions
- Online Banking
- Transfer money
Things to check before opening a Savings Account
Below are few points which need to be taken into consideration before opening your saving account –
Minimum Opening Amount
Some banks require you to make a minimum deposit before they open and activate your savings account. This is usually to cover costs associated with setting up the new account and then maintaining it. Having to make a minimum opening deposit may defer you away from that savings account.
Minimum Monthly Balance
In order to lap up the high-interest rate on offer, you are required to maintain a minimum monthly balance or deposit a certain amount every month. If you fail to meet the requirements the bank will lower your interest rate or pay no interest for that month. So, it’s a good idea to work out how much you can save each month and then look for a bank that offers bonus rates for fulfilling this criteria. It’s also a good idea to set up an automatic deposit into the account.
Services offered with the Savings Account
Does the account have facilities like Debit card, Cheque book facility, balance sweep facility, Net Banking, Phone Banking Account linked credit card option etc.? With the demonetization in progress, these facilities are taking priority. Hence, even if it means having a little more minimum deposit, it is better to get all these facilities.
Promotional Interest Rate
As you start your search for a new savings account you’ll come across plenty of banks enticing you to sign up with them. DBS Digibank and Kotak Mahindra Bank are currently offering an interest of 7% on FDs through their saving account. A lot of banks offer an impressive promotional interest rate to new account holders. This rate is sometimes only for a limited time before reverting to the standard variable interest rate of the account. There’s no point signing up for a high-interest rate for a short period of time and later on, the interest rates revert back to the low rates.
Frequency of Withdrawals
A lot of accounts have a limit on the number of withdrawals you can make a month. If you believe you might need to make frequent withdrawals then choose an account that allows you to do so without penalties.
Some savings accounts don’t come with facilities wherein you can withdraw money from any ATM. So if you need to access your savings you’ll need to transfer the money into your ATM linked transaction account in order to withdraw it. If you’re likely to withdraw money regularly from your savings account, find an account that features good ATM facilities and low transaction fees on the usage of other bank’s ATM’s.
Account Related Fees
There are plenty of savings accounts out there with no account fees, however, many savings account come with various fees, which are listed in the terms and conditions, like:
- ATM withdrawal fee
- Branch deposit fee
- Over the counter transaction fee
- Cash deposit fee at a non-home branch
These are some of the features that need to be looked into, before opening a savings account.
Also remember, just opening a savings bank account is not the end of the journey, you need to develop a relationship with the bank so that for further savings, investments, loans or other options, they can be better prepared to serve you in times of your need.