Whether you are a salaried person, a businessman, a housewife, a pensioner, or anyone else, having a savings bank account is one of the basic necessities of life in terms of finance. A savings bank account is not just meant to help in investing. This type of bank account can be opened by both individuals and business entities. In fact, opening a bank account is the initial step in the life of most individuals.
If you have plans to open your first Savings Account or you already possess one and want to open a new one, you might get overawed with a number of options available today. However, by having the knowledge of several thing that must be considered while opening a Savings account can help you find the right kind of Savings Account for you.
7 major things that one must consider before opening a Savings Account
Here, we have highlighted major things that one must consider before opening a Savings Account.
1. Rate of Interest
It is quite widely understood that savings bank accounts carry the lowest interest rates in comparison to other investment options available today. These accounts usually give the interest rate of 3.5% p.a to 4% p.a. However, some financial institutions claim to offer an interest rate of up to 7% p.a. on Savings Accounts. However, in the case of higher interest rates on savings accounts, the banks typically focus on maintaining higher balances, longer tenure, or both. Hence, it is advisable to fetch all the details from the bank representatives beforehand and carefully go through the product brochure to avert any kind of miscommunication.
2. Minimum Average Balance Requirement
The Minimum Average Balance obligation refers to the average of all the bank balances an account holder should carry in a month. Different banks may have their own minimum balance requirements for account holders. A majority of public sector banks have a 0 to Rs 2,000 minimum average balance requirement. On the other hand, private banks ask their accountholders to maintain a minimum balance of Rs 5,000 to Rs 10,000. This obligation may vary with the type of chosen Savings Bank Account. When you choose a higher version of a Savings Account, you may need to maintain a higher minimum balance in the account. However, these types of premium accounts come with additional services, such as a Relationship Manager, home-based banking facilities, high-end debit cards and credit cards, discounts on locker charges, etc.
3. 24×7 Customer Service
In today’s times, a majority of banks offer Internet banking services to their account holders. However, some financial institutions still do not allow them to perform most frequent transactions online. Some banks provide web-based access to all the important transactions, but their Internet banking and mobile banking services are not exemplary. If you like to do banking transactions online, it is strongly recommended to check for the 24×7 banking facility.
4. Branch Network
Though a majority of people prefer to do different types of banking transactions through debit or credit cards, mobile banking, internet banking, Unified Payments Interface (UPI), etc., some actions cannot be performed online, and you may be obliged to visit the bank branch. Hence, it is recommended to confirm if the bank has a wide network of branches and if the closest branch is at an easy distance.
5. Credit
When you possess a savings bank account in a bank, it becomes easier to get a loan from the same bank. This is because banks refer to your banking history while offering the credit facility. If you have a good relationship with the bank, it is an added advantage for you when opting for a loan. In addition, a majority of banks provide pre-sanctioned and pre-qualified loans to their customers with great bank balances and credit record. A loan can easily be availed with minimum to no documentation. Thus, if you have some credit-related needs in the future, you can consider the credit facilities offered by the bank.
6. Charges
The banks charge you for some of their services even though they pay you interest for investing your money with them. Banks typically impose service fees for utilizing non-network ATMs over the allotted amount of time, receiving transaction SMS alerts, making cash withdrawals, deposit fees, choosing to write more checks than the free limit, and other related activities. The Welcome Kit and Schedule of Charges are provided by the banks upon account establishment. In order to prevent future disagreements, you should also verify the annual fees associated with debit cards, credit cards, lockers, etc.
7. Customer Service
Customer service is a crucial aspect of any kind of banking service. This is because of the presence of different types of banking services and their complexity. A bank with excellent customer service is always considered a reliable choice for both individuals and corporate account holders.
The Conclusion
Since a savings bank account is a prerequisite for most people to receive different types of benefits apart from getting basic banking services, it is necessary to choose the most appropriate bank account from a reputed banking institution. Do thorough research before choosing a specific bank to avail its services.