5
tips to select a savings account
If
you don’t research before opening a savings account, you may end up earning a
lower interest rate or paying more for certain services. To maximise your
earning potential and minimise your losses, the things you should consider
before choosing the account are….
1 INTEREST RATES
Though a savings account offers meagre interest rates compared with other investing avenues, you do need to park some cash here for ready availability and it doesn’t hurt to choose the one that offers the highest rate. After the RBI deregulated interest rates on savings accounts in October 2011, banks have started offering variable rates. Currently, YES Bank is giving a return of 7% a year for a balance of more than 1 lakh and 6% a year for balance of up to 1 lakh. Kotak Mahindra Bank has on offer 6% a year for deposits of more than 1 lakh and 5.5% a year on balance of up to 1 lakh. Though 0.1% seems too minuscule a difference, it can add up to a reasonable sum for higher savings. However, keep in mind that higher promotional interest rates can fall later, so choose your account according to your savings plan. Opt for stable rates if you are in it for the long term.
2 MINIMUM BALANCE
Go for a savings account that requires you to park a low or nil minimum monthly/quarterly average balance. This is because in case of non-compliance, you will have to pay a penalty, which can be as high as 350 a month. While ICICI Bank demands a minimum monthly average balance of 10,000, Standard Chartered’s ‘Breeze Banking’ savings account is a zero-balance account for the first six months. After that, it demands a quarterly minimum balance of 25,000. Banks like the Oriental Bank of Commerce, Punjab National Bank, and now, the State Bank of India don’t have the minimum balance criterion.
Go for a savings account that requires you to park a low or nil minimum monthly/quarterly average balance. This is because in case of non-compliance, you will have to pay a penalty, which can be as high as 350 a month. While ICICI Bank demands a minimum monthly average balance of 10,000, Standard Chartered’s ‘Breeze Banking’ savings account is a zero-balance account for the first six months. After that, it demands a quarterly minimum balance of 25,000. Banks like the Oriental Bank of Commerce, Punjab National Bank, and now, the State Bank of India don’t have the minimum balance criterion.
3 DEBIT CARD DEALS
Since most banks are intent on wooing new customers, lucrative debit card schemes can be the differentiator when it comes to choosing your savings account. Consider the bank account which offers a better deal on debit cards. Banks like the Standard Chartered offer value-added services and discounts at restaurants, zero surcharge at petrol pumps and customer loyalty incentives like cash-backs and reward points on select purchases. However, keep in mind that some banks also charge an annual fee for the use of plastic. For instance, ICICI Bank levies 99 a year for its debit card usage. For borrowers, IDBI Bank offers a loan option against its debit cards, while the Union Bank of India’s debit card holders can avail of free insurance against accidental death—up to 2 lakh for a principal card holder and 1 lakh for an add-on card holder.
Since most banks are intent on wooing new customers, lucrative debit card schemes can be the differentiator when it comes to choosing your savings account. Consider the bank account which offers a better deal on debit cards. Banks like the Standard Chartered offer value-added services and discounts at restaurants, zero surcharge at petrol pumps and customer loyalty incentives like cash-backs and reward points on select purchases. However, keep in mind that some banks also charge an annual fee for the use of plastic. For instance, ICICI Bank levies 99 a year for its debit card usage. For borrowers, IDBI Bank offers a loan option against its debit cards, while the Union Bank of India’s debit card holders can avail of free insurance against accidental death—up to 2 lakh for a principal card holder and 1 lakh for an add-on card holder.
4 TRANSACTION CHARGES
Before choosing a savings account, make sure you read the fine print because most banks now charge extra for transactions or services that you were not paying for earlier and may not even avail of. For instance, did you know that the ICICI Bank charges 100 for the issuance of a duplicate passbook and 25 for the regeneration of your debit card PIN? Similarly, HDFC Bank levies 50 for issuing an additional cheque book and 100 for the replacement of your ATM card? So, before you opt for the savings account, remember to go through the sundry charges that are associated with it to minimise your operating costs.
5
NET BANKING
Opt for a savings account in a bank that offers you the Net and mobile banking facilities since you can conduct transactions from the comfort of your home and office. This is especially important since most banks now charge you for specified physical transactions at the bank branch, whereas these are free if you conduct them online or over the phone. For instance, HDFC Bank will charge you 50 for stop payment of a particular cheque, but this service is free if you conduct it through Net or phone banking. Similarly, it will cost you 100 if you ask for the issuance of a duplicate statement by going to a branch, but only 50 if you do it through Net banking. So go for the bank that offers you these facilities to reduce your outgo.
Milan Sharma ETW120924
Opt for a savings account in a bank that offers you the Net and mobile banking facilities since you can conduct transactions from the comfort of your home and office. This is especially important since most banks now charge you for specified physical transactions at the bank branch, whereas these are free if you conduct them online or over the phone. For instance, HDFC Bank will charge you 50 for stop payment of a particular cheque, but this service is free if you conduct it through Net or phone banking. Similarly, it will cost you 100 if you ask for the issuance of a duplicate statement by going to a branch, but only 50 if you do it through Net banking. So go for the bank that offers you these facilities to reduce your outgo.
Milan Sharma ETW120924
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