Savings Accounts: Which Type Suits Your Requirements?
Saving accounts are the most basic account to hold in a bank
.
They are the oldest and simplest accounts that a person can operate.
With the advent of debit cards and automated teller machines (ATMs), people have access to their funds at any time of the day, at any place.
In India, banks are bound by the law, in terms of the interest that are offered for savings accounts.
The Indian Banks Association defines a savings account as a bank account which is the most common operating account for individuals and others for non-commercial transactions.
Most banks have a requirement of a minimum balance or average quarterly balance, which must be maintained to keep the account operational. However banks have now started offering zero balance or no frills savings accounts which do not require you to keep a certain amount of funds in the account at all times.
A minimum balance or an average quarterly balance is the quantum of funds which must be present in the account, over a given period of time. The interest paid on a savings bank account is calculated on a monthly or quarterly basis.
Since October 2011, the interest rate offered on savings accounts has been deregulated and most private banks now offer higher rates of interest than public sector banks, on their saving accounts.
Over time, bankers have realized that a one size fits all approach to savings accounts is not the ideal way forward.
They began to experiment with different approaches and now offer at least 2-3 variants in savings accounts, based on the requirements. Most of these variants offer features like more services or better rates of interest. The variations in types of bank accounts are mainly based on the amount of funds in the account.
The main factors that should be considered by a person before opening a savings account are:
1)The amount of minimum balance that has to be maintained. The higher the minimum balance; the more services and facilities are offered. Private banking, home drop and pick up of cheques and cheque-books are some examples. Some banks even issue credit cards if you hold a higher minimum balance account with them.
2)The penalty charges in case of default are also to be considered. If you fail to maintain your minimum balance of if you issue a cheque which is dishonoured then the bank levies penalty charges. The higher your minimum balance, the higher the charges.
3)Other facilities offered like net banking, debit cards, overdraft facilities, credit cards and auto sweep in to fixed deposits must also be looked into.
4)Details of charges, if any for issue of cheque-books and limits fixed on number of withdrawals, cash drawings. These limits generally increase as you opt for the more lucrative accounts.
5)Zero balance savings accounts are offered when you hold a fixed deposit with the bank.
They also offer an overdraft facility which is up to 90 percent of the value of the deposit.
You only pay interest on the funds you use while your FD gains its full term. Thus you are not strapped for cash and your FD earns its full interest.
by: John victor
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