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, ET lists the
things you should consider before choosing the account.
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 BankBSE 1.56 % 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 BankBSE -0.04 % 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.
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 BankBSE 0.53 % 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 BankBSE -1.86 %, and now, the State Bank of IndiaBSE -0.70 % don't have the minimum balance criterion.
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 BankBSE 1.47 % 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.
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?
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 BankBSE 1.56 % 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 BankBSE -0.04 % 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.
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 BankBSE 0.53 % 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 BankBSE -1.86 %, and now, the State Bank of IndiaBSE -0.70 % don't have the minimum balance criterion.
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 BankBSE 1.47 % 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.
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?
Source : http://economictimes.indiatimes.com
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