MUMBAI: When it comes to managing your finances, a Savings Account is often the first requirement that you need to fulfil. A savings account helps you save money by depositing funds and earning interest on your savings deposits. However, there are various banks offering numerous types of savings accounts, which makes picking the right one a bit of a challenge. So, here are the key factors you need to weigh before you open a savings account.
1. Define Your Purpose and Evaluate Lifestyle Requirements
The first step is to ask yourself, Why do you need to open savings accounts? Is it to save money, receive a salary or park funds for your future aspirations?
Once you have decided on your purpose, you need to evaluate your lifestyle needs to determine the type of savings account you need. Bank offers savings accounts tailored to specific domains, such as accounts for students, professionals, homemakers, senior citizens and young professionals aged 21-26. Here, you must decide on the type of savings account which will most likely serve your needs and offer you the best value.
2. A Convenient Location or Better Interest Rates?
It may seem convenient to open savings accounts at the nearest bank. However, it could mean missing out on better interest rates. After the 2011 deregulation of interest rates by the Reserve Bank of India (RBI), banks are allowed to set interest rates. This means some banks may offer higher interest rates than others.
For example, XYZ Bank offers up to 7% p.a. on a higher balance. At the same time, PQRS Bank offers 6% p.a. on amounts above ₹1 lakh. Over time, even a small difference in interest rates can make a noticeable impact on your savings. That is why comparing interest rates is essential when you are open savings account.
3. Check Minimum Balance Requirements
Ensure to check the minimum average balance (MAB) or average monthly balance (AMB) requirements before you open savings account. You might find that some banks may require you to maintain a sum of ₹10,000 or more in urban branches, whereas other banks may offer a zero-balance savings account.
If you do not meet the requirements, you could incur penalties. So, ensure to pick a savings account which suits your spending habits.
4.Evaluate Debit Card Offers and Their Benefits
Banks provide Debit Cards linked to your savings account. These debit cards offer access to cash at ATMs with other perks. For example, insurance coverage, fuel surcharge waivers, EMI options or cashback and rewards. However, not all debit cards offer the same benefits. Some may have higher annual fees or ATM usage limits. Therefore, always compare the type of debit card a bank is offering. Evaluate whether the features of the card will suit your needs.
5. Understand Transaction and Service Charges
Every bank has a schedule of charges for various services they offer, such as SMS alerts, cheque book and more. You must review these details before you open savings accounts. You can easily find information on the schedule of charges on the bank’s website, your account prospectus and the bank branch.
6. Digital Accessibility
Digital banking is an essential requirement to manage your funds. Look for the bank that has a user-friendly mobile application and net banking facility. Also, consider checking the bank’s ATM and branch network. Good digital services and strong physical access ensure convenience wherever you are.
7. Customer Service Standards
Great customer service often decides whether your banking experience is good or not. If there is a failed transaction or a technical issue, your bank’s customer service should be able to provide you with quick support. To evaluate this, you could check customer feedback and online reviews.
Open a Savings Account That Meets Your Needs
It is essential to spend time thinking and comparing your options before you open savings accounts. After all, it is not just about choosing a savings account but also about selecting a long-term banking partner. The savings account and the bank should both meet your goals, spending habits and requirements. Take your time, compare your options and then make an informed decision.
