New-age savings accounts: How to choose?

Adhil Shetty

When everything from life insurance to a bank fixed deposits is customized to your exacting financial demands, why should savings bank accounts be far behind Today, you can choose from a variety of savings bank account types depending on your needs and sensibilities.

Here is a list of a number of popular savings bank account types offered by various PSU and private banks that you can choose from depending on your requirements and financial health.

1: Regular savings bank account

These are offered by all banks when you approach them to open an account. You can open a savings bank account in your individual capacity or jointly. With this account, you get access to ATM and debit cards offered by the bank while you can opt to choose other additional services like internet and phone banking.

For most regular savings bank accounts, you will need to adhere to the minimum or an average quarterly balance requirement as decided by your bank. This can range from Rs. 2500 to Rs. 10,000 depending on your bank. Your account balance up to Rs. 1 lakh is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), making your capital relatively safe. The amount of interest you will earn also varies from bank to bank and can range between 4% and 6%.

2: Zero balance or no-frills savings bank account

If you are not able to opt for a regular savings bank account because of limited capital, you can opt for a no-frills account with a zero balance facility. People belonging to economically weaker sections of society, for example, opted for such accounts under the Pradhan Mantri Jan Dhan Yojana -PMJDY with zero balance facility.

For most banks, if your minimum balance exceeds a certain limit (usually fixed at Rs. 50,000) or if your overall transactions exceed a Rs. 1 lakh limit for the financial year, your account would be converted into a regular savings bank account with applicable criteria.

3: Salaried bank accounts

If you are working with any company, you will be offered a salaried bank account depending on the organization you are working for. The salary bank account comes with many concessions including free multi-city cheque-issuing facility and relaxation or zero minimum balance.

Usually, your salaried account is active as long as you are working with that entity although you can get it converted into a regular savings account if you choose to stop working with the company anymore.

4: Sweep-in savings bank account

Sweep-in account is a combination of savings bank account and a fixed deposit account. Any surplus funds over a pre-fixed limit are automatically fixed in multiples of a pre fixed sum as a one year fixed deposit. Sweep-in accounts have an automatic reverse sweep facility whereby when your money falls below the limit you can earn interest applicable for the time period. A service tax is charged for services to operate a sweep-in bank account.

5: Miscellaneous savings bank accounts:

Banks have come up with various savings bank account types for various targeted customers. These include the likes of:

Children's savings bank accounts: Now, children below the age of 18 years are also allowed to have their own bank accounts, with their parents as guardians of the account. The account can be converted into a full-fledged savings bank account once the child attains 18 years of age.

Privilege savings bank accounts: Banks offer privileged banking accounts where you are supposed to keep more than a pre-fixed sum in your bank account as a bare minimum. Bank offers services like priority banking, home pick-up requests, and no commission on regular banking facilities like no charges for NEFT, demand drafts, etc.

Senior citizens savings bank accounts: Banks have also come up with accounts for senior citizens offering multiple services including separate counter for ease of usage in cash withdrawals and other banking services.

Choosing appropriate bank account type

Instead of opening just a regular savings bank account, you should look at your financial parameters and choose the best possible option for you. For example, if you plan to use the bank account as an investment account, opting for a sweep-in facility enabled account is likely to give you better returns.

If you know you will have less working capital on ongoing basis, there is no point in opting for a privilege account and the pay fines for shortages in maintaining your average or minimum quarterly balance. Opting for a no frills zero balance account should be preferred in such situations.

Savings bank accounts have come a long way from just one single bank account type available for all. Choose your bank account depending on your needs and the amount of capital you are likely to keep in your savings bank account.