Opening a savings bank account? Here is how to pick the best one suited for you

If you do not meet the minimum balance requirement, usually, the bank charges a fine on an account, which could be avoided with a zero-balance account.

A savings account is quick to set up, offers easy liquidity, is a safe place to park funds, and is one of the most common types of bank accounts in the country. As compared to other countries where interest rates are zero or negative, savings bank accounts in India offer interest on deposits, letting an investor’s money grow over time.

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Before opening a savings account, experts say one should do their due research and make sure to know the features and benefits offered by different banks.

For instance, don’t limit yourself to the interest rates offered. Minimum balance criteria of a savings account, service charges, digital presence, easy online access, nearby ATM and branch density, debit and credit card offers are also necessary and need to be looked at. This way you can choose the ideal account for your banking needs.

Interest rates

While opening a savings bank account, this is the foremost considerations that you need to make, the interest rate offered by the bank. Note that, banks can set interest rates at their discretion according to RBI, interest rate regimen set in 2011.

From public banks to private banks to small-finance banks, various range of interest rates is offered on the Savings Accounts. Generally, the interest rate varies from 2.5 per cent p.a. to 4 per cent p.a. with most large banks. On the other hand, small finance banks such as Ujjivan Small Finance Bank, ESAF Bank, AU Bank, Jana Bank, etc. offer interest rate ranging from 3.50 per cent to 7.25 per cent on regular saving account.

Criteria for minimum balance

This is one of the most important points as if the minimum balance criteria is not met, you could be charged a lot of money at the end of every month. Hence, before opening a savings account, check with the bank regarding maintenance of minimum balance. Also, find out if there is the option of opening a zero-balance account.

If you do not meet the minimum balance requirement, usually, the bank charges a fine on an account, which could be avoided with a zero-balance account.

Service charges

Go through the terms and conditions carefully and find out about such charges associated with the account.
Look at charges of services that you will frequently use. For instance, if you need to send money abroad, find out if the bank levy charges for making transfers to overseas bank accounts. See if there is a limit on the number of free ATM withdrawals you can make every month, or is there a limit of free online transactions, etc.

Usually, most banks charge an administrative fee when the account holder’s account balance falls below a certain amount. Hence, keep note of the maintenance of the minimum account balance.

Digital presence

With everything going digital, most financial transactions are now preferred digitally. Hence, check that the bank has a proper digital presence and offers good digital banking. At the least, the basic functions like checking account balance, transferring funds, or open a Fixed Deposits or PPF digitally should be available.

Debit and credit card

Generally, while opening a Savings Account most banks offer a host of freebies as part of the joining kit. This usually includes cheque book, supplementary cards, and discounts on groceries, dining or movie tickets, swiping cards, etc. Experts say, don’t just be attracted due to such freebies, make sure that they make sense for you. For instance, if one does not need movie tickets, then such freebies don’t matter.