Savings bank accounts are provided by scores of financial institutions. Many of these institutions, mostly nationalized and private, offer different kinds of savings accounts to match distinct individual needs. Thus, before you open a savings account, ensure to compare the account amongst different institutions to avail an account with minimal charges and optimal benefits.
Here are some key points you must factor in before opening a regular or online saving account.
- Interest rate
The major factor that you must consider when selecting a savings bank account is its interest rate. With the deregulation of the rate of interest rate regime by RBI, financial institutions can now set rates as per their discretion. Presently, savings bank account rate usually ranges anywhere from 3 percent to 6 percent p.a. for private sector banks, up to 3.35 percent p.a. for public sector banks and up to 7 percent p.a. on small finance banks. Remember that higher interest rates on savings accounts are offered only if your balance in the account is within a particular threshold amount.
- Minimum balance amount criteria
Before you open a savings bank account, check the minimum balance requirement and the penalty associated if you are unable to maintain the minimum balance. While financial institutions do offer basic savings accounts with zero minimum balance requirement, such bank accounts offer basic banking services with restrictions on withdrawal, transfer, ATM transactions, and deposit amounts.
- Offers and benefits on debit cards
Many of the institutions offer purchase protection and free insurance on their debit cards. Few debit cards also offer discounts on purchases, EMI facility, reward point, cashback offers, and airport lounge access. If used responsibly, debit cards can reduce your transaction cost to some extent. Thus, when selecting a savings bank account, ensure to compare various deals offered on debit cards.
- ATM proximity
Factor in the number of ATMs available near your location or cities frequently visited by you. Note that as the number of free transactions through ATMs of other institutions is limited, the absence of your financial institution’s ATM near your location may unnecessarily enhance your transaction costs.
- Service quality
As most of the services provided by the institution’s branch are now available on its website and app, you might not require visiting the institution physically too often. But for services like locker transactions and cash deposits, you might still have to approach the institution physically. Thus, carefully factor in the promptness and quality of such services before opening a savings bank account. In such aspects, private banks often outscore public sector banks.
- Service charges
Before you open a savings account, compare service and various transaction charges charged by the institution like cheque return charge, outstation cheque collection charge, debit card annual charge, cheque book issuing charge etc.
Ending note
As savings bank account is the primary mode for all major transactions, you must select your account after considering all the factors listed above to avail maximum benefits at reduced cost. Also, make sure to know and have all required KYC documents such as your address proof and identity proof documents, handy.
