Here are some tips that will help you choose the best possible savings account for your needs. You should do a little homework before signing on the dotted line.
Want help in choosing the best savings account? You should invest a little time and energy into the process. Too often, we plunge into creating savings accounts randomly, without examining their pros and cons. A savings account is the first and foremost step towards accessing banking and financial services. This is the account where savings are accumulated/deposited, earning interest on the same. It is also an account where we receive money or make payments from the same. Here are some tips that will help you choose the best option for yourself.
The Best Savings Account- Tips to Choose
A higher rate of interest
You should look for best saving account which offer comparatively higher rates of interest. This will give you superior returns, even if maintenance and other charges are deducted. Many public sector banks offer interest rates between 2.5-3.5% on savings accounts. Many private sector banks sometimes offer slightly higher rates. Small finance banks also have higher rates at times. However, you should note that higher rates are mostly available for particular amounts in the account. You should stay in the loop about current interest rates. Also know that interest income surpassing Rs. 10,000 will be taxable as per your tax bracket.
A lower requirement for AMB (average monthly balance)
The AMB (average monthly balance) requirement should be scrutinized carefully. Some savings accounts need users to maintain a minimum balance every month. Failing to meet this guideline will attract a fine/penalty. However, these accounts usually come with added benefits like insurance coverage, pre-approved offers for loans, relationship managers, online DD facilities, free cheque book facilities, etc. Many premium accounts have the AMB requirement at Rs. 50,000-100,000, although the interest earned is comparatively lower. You should go for a savings account with a lower AMB requirement if that is what you require. If you need the extra services and perks and are comfortable maintaining a minimum amount in your account, then you can consider a premium account.
Hidden fees/charges on savings accounts
You should carefully examine the schedule of fees/charges on the account. These may cover charges for ATM usage, annual maintenance, AMB penalties, fund transfers, transactions, ATM fees beyond the limit, and more. Premium savings accounts will have higher charges for maintenance. This will impact your total interest earnings. If you use the ATM frequently, then you should consider a savings account with free transactions, even though the AMB (average minimum balance) could be comparatively higher.
Attractive discounts and deals
Many banks have savings accounts that offer extra benefits. These include railway lounge/airport access, complimentary tickets to movies, no/affordable cost EMIs for digital transactions, complimentary OTT and other subscriptions, cashback offers for paying utility bills, and more. Check the discounts, deals, and other offers available for various savings accounts. There are rewards programs available with debit cards, where the accumulated points can be redeemed for several benefits. If you are okay with the AMB requirement on a premium account, then you can consider the same, especially if there are more offers and perks involved.
Easy digital accessibility
Check whether your bank has a robust digital platform. Check whether all basic transactions, fund transfers, and balance checks can be done smoothly with your PC and smartphone.
Check the ATM network
While opening a savings account, look for a bank with a wide network of branches and ATMs. Go for a pan-Indian bank which has ATMs in almost all locations.
These are some things to keep in mind while choosing the best savings account for your needs. Remember to do some research before taking the final decision.