Factors to consider before opening a digital savings account

Amid the COVID-19 pandemic, millennials have become more cautious with their spending.

The Covid-19 pandemic has changed the whole scenario for the Indian banking industry. At a time when the whole country is under lockdown-like restrictions, industry experts say the need and relevance of having digital savings accounts have gone up exponentially.

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Along with traditional banks, various digital banking/mobile banking startups are also offering digital banking solutions, which are needed especially during this pandemic.

According to a study conducted by Niyo nationwide, among 8000 millennials residing in metro and non-metro cities revealed that 70 per cent of Indian millennials are now inclined towards digital banks, especially for convenient customer support.

Experts say amid the COVID-19 pandemic, millennials have become more cautious with their spending. The data from Niyo also stated, 55 per cent of respondents interestingly, said that they would switch banks for rewards and offers and 45 per cent would switch banks for better interest rates.

Tushar Verma – Business Head, NiyoX says, “Choosing a financial institution to look after one’s money is one of the most important financial decisions one can make.” He further adds, “Technology being the foundation for the growth of Fintech in India, it played an important role in making financial services accessible and convenient for end customers.”

Usually, most of these digital/mobile banking platforms such as Niyo, come with multiple account options that offer users access to wealth management along with a savings account. Some also offer the facility to invest in mutual funds, facility to track all one’s investments in one place, Robo advisory and a feature that rounds up one’s expenses and invests in one place.

Verma says, “One should keep in mind that different banks offer different levels of service, charge different levels of fees, and pays significantly different amounts of interest on one’s money.”

Here are a few factors to consider before opening a digital savings account;

Interest Rates

One of the most important factors to consider in choosing where to bank is the interest rate offered.

Verma says, “People often park some money in their savings account as it comes in handy. However, such money parked for years doesn’t grow with the growing inflation rate. Hence, it is advisable to opt for a savings account that offers interest at par/higher than India’s inflation rate.”

Fees

Most of the banks in India expect account holders to keep a minimum balance in the account and whenever the criteria are not matched, banks charge a penalty.
Besides that, there are multiple fees that banks charge customers for, such as Balance Maintenance fees, SMS charges, ATM card charges, Returned cheque fees, Out-of-network ATM fees, etc.

Verma says, “Fees are by far the largest distinguishing factor among checking accounts. All else being equal, one should choose the checking account with the lowest charges.”

Other features

Most of the digital savings accounts offer a great UI and UX experience. Industry experts say, an important thing to consider is additional features – 24×7 customer support, expense tracker, option to set limits on various tractions – UPI, POS, Online, Lock and Unlock debit card via the app, etc.