Savings accounts are the main way that most consumers communicate with financial institutions, particularly banks. According to the definition of a savings account, this account serves as a secure haven for your extra income while enabling you to set money aside for the future of your family. Although this account is a significant part of your investment portfolio, it is the least used financial instrument.
Savings accounts are crucial to our investment portfolio since they help us safeguard our funds. The least researched financial asset is them. This post will look at a few factors that can help you choose the ideal savings account for your need.
Such an account type offers far lower risks and is safe for storing your money. They provide a wide range of services, whether it be through a traditional bank or an internet bank. For instance, a premium savings account enables you to save more money for a longer period of time while generating significant returns.
Do you struggle to make a decision on the type of savings account to open? You can choose the ideal kind of it for you by looking at the list of factors we’ve put together. Let’s look more closely.
When selecting a savings account, take into account these factors.
Interest Rate
Savings accounts frequently offer the lowest interest rates when compared to other types of investments. Even though the Reserve Bank of India deregulated interest rates in 2011, the majority of banks still provide low savings account rates of sub 4%. Before choosing a bank, it is usually a good idea to study the fine print. While some private banks advertise rates of 6% or higher to tempt customers, this is not always a good idea. To compute the amount, several financial organizations offer a savings account calculator.
Lowest Balance
Most public sector banks don’t need a minimum cash balance for accounts or just require a small one (Rs. 500-1,000). However, the majority of private players would require a higher minimum balance (Rs. 5,000-10,000 or more). Picking a bank where you don’t have to deposit a lot of money is ideal.
Availability or reach of the financial institution
Web-based applications, such as net banking, and mobile banking have entered the financial sector and are quite popular with today’s youth. However, having a bank with a substantial network of branches is helpful because some transactions require you to visit a branch.
Service Fees
Some banking institutions charge you for additional services after you’ve used up your free quota (25–50 check leaves) for the fiscal year. These services include cheque books, duplicate ATM cards and PINs, and SMS notifications. Before creating a savings account, make sure you are aware of these fees. On the other hand, a bank with greater transparency is better to one that appears affordable but includes a number of hidden expenses.
Offers on debit cards
To set themselves apart from rivals, the majority of banks provide discounts on their debit cards, ranging from cash-back deals to insurance coverage. On the other hand, some banks impose annual fees on debit cards, while others exclude customers who use their cards for enough transactions each year. Banks, for instance, provide gold and platinum debit cards, which offer a number of advantages but typically have an annual fee.
Accessible Banking Service
Several private banks offer services like cash/check pickup, demand draught delivery, and paperwork pickup at their customers’ doorsteps to accommodate the hectic schedules and busy lifestyles of today. For account deposits, banks have started to offer doorstep cash collection. Demand draughts may also be sent to the specified address by some banks. However, each of these services has a cost that you should take into account before opening an account with that bank. Priority banking verticals have been created by several banks, and high-net-worth clients are served by specialized relationship managers in these verticals.
Accessibility
The bank should be reachable in person, online, and by phone. It is advised that you open an account at the branch that is most convenient for your residence. If you already have one or more accounts that aren’t nearby, think about opening a new one. Additionally, make sure you have many ways to reach out to people in an emergency, including emails, phones, and apps.
Savings Account Types
Numerous features, services, and advantages are provided by savings accounts. Savings accounts are more practical due to the wide range of available types, each of which is specifically designed to meet the demands of various clients. Five categories make up savings bank accounts.
Routine account
A regular or basic savings account accepts deposits at any time. A little portion of the account’s balance is paid interest throughout the year. Your savings account must maintain a minimum balance, and you will be fined if it doesn’t. There will be more deposit and tenure freedom, but there will be fewer withdrawal options.
Payroll Account
As the name suggests, salary accounts are for those who get a salary. Savings accounts are frequently established for employees by their employers. You gain from not having to maintain a minimum amount in addition to the regular benefits of a savings account. The accounts are promptly converted if no pay is credited for three consecutive months.
The accounts are promptly converted to traditional savings accounts if no pay is credited to them for three consecutive months. In such cases, a minimum balance requirement will apply to the account.
Account for Senior Citizens
This kind of account is intended to give senior persons financial security. This account has a minimum balance requirement and offers significant interest rates. Pension money may be connected to these accounts.
Minors & Children’s Account
These savings accounts are only available to those under the age of eighteen. A children’s savings account allows parents to put money away for their children’s future while simultaneously fostering in them a sense of investment.
Similar to a regular savings account, the savings account for kids and minors provides the same advantages. You can manage a minor’s or child’s account without having a minimum balance.
Women’s account
Specially created for women are women’s savings accounts. Along with the advantages of normal savings accounts, women’s savings accounts provide greater interest rates and discounts on bank items.