What to know before opening a savings account
When you go for a bank account, don’t just look at the interest rates. Most banks have segmented savings accounts based on your needs. The higher the balances you are willing to maintain, the better the service you will receive.
Depending on the type of account, you will also need to maintain the specified balance, which may vary from bank to bank. For example, small savings banks may request an average monthly balance (MAB) of ₹5,000 in the subways and ₹2,500 in non-subways, according to data from Paisabazaar.com.
Large private banks may require ₹10,000 to 15,000 MAB in the subways and ₹500-1000 in semi-urban areas. Public sector banks have the lowest MAB requirement.
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Take the example of the State Bank of India. The no-frills account – basic savings bank deposit account – requires a minimum balance of zero, and there is no limit on the maximum amount. But you don’t get free checkbooks, according to the bank’s website. Free withdrawals are only available at the bank branch or at an ATM. The customer receives a Rupay ATM-cum-debit card.
But if you opt for a savings account, you can benefit from a whole series of services. There are mobile banking, SMS alerts, 10 checks per fiscal year, customers can transfer account online. There is also no minimum balance requirement.
Then there is the savings account plus. The bank account is linked to a deposit system. Whenever your account balance exceeds a specific limit, the money is automatically transferred to a deposit. Besides all the features of a savings account, the customer also gets a loan against the money transferred to the linked deposit, 25 free checks, the money transferred to the deposit earns higher interest.
There are also premium accounts if an individual client has a relationship worth Rs30 lakh i.e. money in bank account, fixed deposit, mutual fund and demat crosses the threshold. If there is a new customer, the initial deposit should be Rs10 lakh, and within 12 months the relationship crosses Rs30 lakh.
It is also available for those with a monthly salary of Rs2 lakh or more or if the value of the home loan is more than Rs1 crore, according to the bank’s website.
In large private banks, you can also get an instant savings account which can be opened online; there are savings accounts for women which mainly offer benefits over purchases and a savings account for children under 18. Some may have a savings account for the elderly to meet their retirement needs.
Therefore, check which MAB and account type is best for you before signing up.
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