What You Need to Know Before Opening a Savings Account?

A savings account allows you to store money safely in a bank for your future needs. Whether you are an individual or a business entity, you can open a savings account. The biggest advantage of owning a savings account is that you will be able to withdraw funds at any time to meet your financial needs. At the same time, you may deposit money to earn more interest over time.

Most commonly, first-time bank customers want to know how to open a savings account. However, they should also focus on a few other relevant things before creating their savings bank account. So, let’s get started!

Factors You Should Consider Before Opening Savings Bank Accounts

If you want to open a savings account at any bank, you must know about a few significant details. 

Savings Account Opening Modes- Online and Offline

Potential bank customers often have questions about how to open a savings account. While some banks offer only offline account opening opportunities, others let you create a savings account online as well as offline. 

If you have chosen the digital mode, you do not need to visit the branch. Many banks have launched apps to help you conduct your banking activities using your smartphone.

No matter whether it is an online or offline account opening process, you should submit documents like-

  • Government-issued IDs like Aadhaar and PAN cards
  • Photographs
  • Documents relating to contact details

You can create a single or joint savings account, depending on your needs.

The Minimum Amount for Opening a Savings Account

If it is a regular savings account, most banks have set the minimum deposit amount. The primary purpose is to cover costs related to the new account setup and maintenance. You can ask bank officials about the initial deposit amount to open and activate the account. 

The minimum account opening amount can range from Rs 500 to Rs 2,000, depending on your account type and location.

Average Monthly Balance

Average Monthly Balance (AMB) refers to the average amount you should maintain in your savings bank account every month. In case the balance is low, you may have to pay a charge for it. 

Interest Rates

The savings interest rate is not the same for all banks. That is why you should compare the interest rates of different banks and financial institutions. In most banks, the interest rate for savings accounts ranges from around 3.0-4% per annum. The per annum interest rate can be up to 7% in some banks. So, it is essential to get detailed information from bank officials before creating your savings bank account. 

Credit Facilities and Other Services

Credit facilities are available to savings account holders at most banks. With a standard savings account, you can apply for loans. However, banks will check your banking history to provide credit. Some banks also provide pre-qualified and pre-approved loans to select customers with good credit histories and considerable balances. 

Besides, you must check for other common facilities, including

  • Cheque book
  • Debit or ATM card
  • Balance sweep facility
  • Phone banking
  • Net banking

In the case of debit cards, some banks offer different options, like gold and platinum versions. But you may need to pay a yearly charge depending on the type of your ATM card. 

Doorstep Banking Facilities

As the name suggests, doorstep banking is a special facility for which you do not need to visit the bank branch for daily banking activities. For instance, doorstep banking facilities include-

  • Cash withdrawal
  • Cash deposit
  • Cheque deposit
  • Demand draft delivery
  • KYC submission
  • Cash pickup against receipt
  • Delivering cash that you like to withdraw

Banks have introduced these facilities to ensure safe and convenient banking. However, you need to pay a certain amount for these services. But many banks offer free doorstep services to senior citizens.

Account-Related Charges

Before opening your savings bank account, you should be aware of various charges-

  • Non-maintenance charges: If you have not maintained the AMB, you may need to pay a charge.
  • Duplicate passbook issuance: In case of loss of the passbook, you will get a duplicate copy at a certain charge.
  • Cash transaction fee: If you have crossed the deposit and withdrawal limit, you may need to pay a cash transaction charge.
  • SMS alert: If you have activated the SMS alert service, you may need to pay a charge.

Offers and Discounts

Most banks offer special discounts and deals to attract customers. These offers may be related to loans, shopping, EMI purchases, and bill payments. Banks announce these attractive deals occasionally. So, you need to stay up to date to avoid missing the details. 

You can also compare offers and deals from different banks before creating your account. It will help you choose the right bank for opening your account.

Any Limit on Withdrawal Frequency

Most banks allow 5 to 6 free monthly withdrawals from the savings account. If your withdrawal frequency has exceeded the limit, the bank may charge a particular amount. Thus, before making frequent withdrawals, you should know about this limit and the potential charge.

Customer Service Quality

Do not overlook customer service quality while creating a savings bank account. A reliable bank always has friendly staff to solve your queries and account-related issues. You can establish a relationship with a bank that provides the best customer service.

Conclusion

A savings account is an income-generating avenue, as it provides interest on the amount you have deposited. Although the savings interest rate is lower than the Fixed Deposit (FD) interest rate, your account balance will increase over time.

You can create savings accounts at various banks and use them for different purposes. Depending on the bank, you may find slight differences in the savings account features. So, you need to check the relevant details before opening your account.