The first interaction most people have with a bank is through a savings account. It is the most standard of account that you can start at a bank to serve basic purposes. For most people, a savings account serves the purpose of parking their savings or an account to pay small bills or such. When you first open a bank account, it in all probabilities will be a savings account. There you can deposit the extra cash that remains after bills, taxes and EMIs and turn it into a small fund of a sort.
The process of opening a savings account is quite simple, yet there are things that you should know about opening a savings account.
Minimum opening amount and minimum monthly balance
The minimum opening amount is the initial deposit that you have to make open your account at any bank. Different banks have different minimum deposit amounts and it is used to cover the costs for opening and maintaining the account.
Minimum monthly balance refers to the minimum amount that your account must have in order for the account to remain functional. In order to get high interest rates, you must have this minimum balance in your account or make monthly deposits. In most banks, the minimum monthly balance requirement is Rs. 500-1000, while some ask for Rs 5000-10,000.
The saving account interest rate offered in most banks is quite low as compared to other kinds of investment options. The interest rate in some private banks is a bit higher than government owned banks. But government-owned banks also offer a low minimum monthly balance. Thus you should choose a bank that matches your financial portfolio.
Purpose of a savings account and services offered with it
As already mentioned, the savings account acts like a ready fund of sorts and can be used for basic purposes like paying bills, saving money, transferring money through banks, online banking etc. For the services part, it is better to choose a bank that offers debit card facilities, cheque book, balance sweeping, netbanking, phone banking and credit card facilities. If availing all these services would mean that the minimum deposit amount will be a bit high, then you should still go for it.
Make sure to choose a bank where opening a savings account will also include facilities to withdraw cash from an ATM. You may need liquid cash at any point and if you have ATM facilities with your bank account, then you don’t need to rush to the bank to get your money. You can simply use an ATM. Banks also charge a transactional fee for withdrawing from an ATM. So make sure to choose a bank that has a low transaction fee because if you’re going to use an ATM frequently, then the transaction fee might add up to a significant amount. Using ATMs of banks other than your own also will have a transaction fee.
Presence of a bank network
People lead extremely busy lives these days and it is impossible to always visit the bank physically for every problem or query. Thus it is advantageous if the bank you are choosing has a satisfactory online presence as well as a functioning netbanking portal. The presence of branch offices of banks is also essential as there are many situations where you need to physically be present in the bank multiple times. It is going to be extremely difficult if there is only one branch of the bank in a considerably large area.
Frequency of withdrawals
Some banks limit the number of times you can withdraw money from your savings account in one month. This is a tricky clause because a savings account serves the need of immediate low amount money requirements and you may need to make multiple withdrawals in a single month. Thus make sure to check this clause before you open a savings account and only choose a bank which has less limitations on the number of withdrawals per month.
Some banks charge a minimum service charge for SMS alerts, duplicate ATM card and PIN and cheque books after the minimum free quota. Make sure to know about these charges from the bank representative that you are dealing with. It is best that you have explicit knowledge of these costs from before.
The document requirement for opening a savings account is more or less the same of all the banks. Some people are always familiar with the processings of a bank but that cannot be expected of everyone. Lack of prior knowledge never means that you will enter into a naive investment avenue. There is no lack of written information and you can always ask. Keeping these points in mind, you will have a smooth and expert experience with a savings account.