9 Things to Consider When Opening a Savings Bank Account

February 1, 2022 Mutual Fund

A Savings Account is one of the most popular bank accounts for individuals, as it is a multi-purpose account that is not just limited to investing. A Savings Account can be opened and used by a person/persons or entity/entities for different requirements. And, for most people, it is their first interaction with the financial system.

If you are planning to open your first Savings Account or already have one but want to open a new account, you might get overwhelmed with all the options available. However, by knowing what things to consider while opening a Savings account, you will be able to find the right type of Savings Account for you. Here are the 9 things you must consider before opening a Savings Account, which will help you find the best Savings Account for you:

1. Rate of Interest:

We all know Savings Accounts pay the lowest interest rates compared to other investment avenues. They typically offer the interest rate of 3.5% p.a to 4% p.a. Some banks offer the interest rate of up to 7% p.a. on Savings Accounts. However, for higher interest rates on savings accounts, the banks usually insist on keeping higher balances, higher tenure, or both. Therefore, it is advisable to get all the details from the bank officials beforehand and thoroughly read the product brochure to avoid any miscommunication.

2. Minimum Average Balance Requirement:

The Minimum Average Balance requirement is the average of all the closing balances you should have in a month. Different banks have different balance requirements in their Savings Accounts. Most public sector banks have Nil to Rs 2,000 minimum average balance requirement, whereas it is Rs 5,000 to Rs 10,000 in leading private banks, depending on the location and bank policy. This requirement can also change with the type of Savings Bank Account you choose. As you choose the higher variant of a Savings Account, you might require to maintain more balance in the account. Such premium accounts offer additional services, such as a Relationship Manager, door-step banking facilities, access to premium debit cards and credit cards, discounts on locker fees, etc. The Minimum Average Balance required for the premium account can be anywhere from Rs 25,000 to Rs 10,00,000 or even more. Apart from this, you should also confirm the initial payment amount you need to pay while opening the account with the bank representative. While most banks ask for Nil to a Minimum Average Balance as an initial payment, others may even ask for an amount double the Minimum Average Balance.

3. 24×7 Banking Facility:

Nowadays, most banks provide internet banking facilities to their customers. However, some banks still do not let you do many of the most-used transactions online. Some banks provide online access to all the necessary transactions, but their internet banking and mobile banking do not offer a good user experience. If you prefer to do most of your banking transactions online, it is advisable to check for the 24×7 banking facility and whether the bank offers to do maximum transactions through internet banking and mobile banking.

4. Network of Branches:

Although most of us do various transactions through debit or credit cards, internet banking, mobile banking, Unified Payments Interface (UPI), etc., some transactions cannot be done online, and you may be required to visit the bank branch. Hence, you should check if the bank has a wide network of branches and if the nearest branch is at a convenient distance.

5. Credit Facility:

It is easier to avail of loans from the bank you hold your primary Savings Account with. While providing the credit facility, the banks consider your banking history with them. If you have a long and satisfactory banking relationship, it is a plus point for you when availing of a loan. Moreover, many banks have started providing pre-approved and pre-qualified loans to their customers with good balances and credit histories. These loans can be availed online instantly and with minimum to no documentation. Therefore, if you think you will have some credit requirements in the future, you should consider the credit facilities offered by the bank.

6. Discounts and Offers:

If you prefer to make your shopping and bill payments cashless, you should not overlook the discounts and offers available on debit cards, credit cards, wallets, and other online transactions offered by the bank. Most leading banks offer lucrative discounts and offer from time to time, especially during festive seasons. These offers can save a substantial amount of money or earn you reward points if used wisely. To get the most of such offers, you should consider holding a Savings Account with a bank that has a tie-up with your preferred merchant or offers maximum overall discounts in your favourite category of products.

7. Fees and Charges:

Although the banks pay you interest for investing your funds with them, they also charge you for some of their services. Banks generally charge with the service charges for using a non-network ATM more than the prescribed number of times, transaction SMS alerts, cash withdrawal, and deposit fee, opting for more cheques than the free limit, etc. After opening an account, the banks provide the Schedule of Charges with the Welcome Kit. You should also check for the annual fee of debit cards, credit cards, locker, etc., to avoid any disputes in the future.

8. Other Banking Products:

We open a Savings Account with a bank to slowly open the doors to other banking products, such as fixed deposits, recurring deposits, loans, insurance, lockers, mutual funds, etc. Therefore, apart from paying attention to the features and benefits of a Savings Account, you should also consider other banking products offered by the bank.

9. Customer Service:

We keep our hard-earned money with the bank only on the basis of trust. If you have any trouble or need assistance with any banking issues, the branch staff and Customer Care should be prompt and helpful. It is of no use if the bank has an excellent line of products with poor customer service.

To Conclude:

By opening a Savings Account, you trust the bank with your money matters. Hence, it is crucial to choose the right bank that offers great deals along with good customer service. Consider the points mentioned in the article to ensure you choose the right bank for opening a Savings Account.

This article first appeared on PersonalFN here