The task of effectively managing money is not easy and a savings account has the potential to help you. It is a requisite for every investor, whether you are an enthusiastic investor or not. The account lets you cover the sudden costs as part of your daily expenses. Additionally, you can build a solid emergency fund that can prove to be extremely helpful in times of an emergency.
It is imperative to know the right account to choose when opening a savings account. Not every account is created equal and you must be well informed about the offering. Here are some things that you must look for when choosing a savings account:
Rate of interest – The rate of interest offered on the account is one of the major factors that will help you decide if the savings account is right for you. Interest rates offered with savings accounts are usually low and this won’t aid in growing your money. However, a savings account is only a place to keep your money safe and bring you access in the case of emergencies. The point is to try and get the highest rate of interest. For example,Kotak Bank gives a 6% interest rate on its saving account. The interest rates of some of the popular banks are given below.
Transaction convenience – It is essential that your bank facilitates the convenience of transactions and aids with other support. Look for different things such as nearby ATMs, ease of online banking, bank branches across the country, online and offline customer care and more. The bank must offer you services and be in operation at your time of convenience.
Monthly fees, Minimum Balance – With a savings account, you are expected to maintain a minimum balance at all times. Not keeping a minimum amount in tour account at all times will incur a fee or penalty. While you may be sure of being able to maintain enough funds in your account at every given point, it is best to get a savings account that does not come with monthly fees.
Fixed-term – While you set a goal to save your money through savings account for the long term, emergencies can occur at any given point. Consider whether you will have to maintain your money saved for a specific term before you can withdraw it. The inability to access your funds or hefty fees associated with withdrawal before the completion of the term can cause you loss of money.
Banks Savings Account Interest Rates
Below are the interest rate, minimum balance requirement and features of some of the banks offering savings account in India as on Mar 2020
| List of Savings Account Banks | Minimum Balance required (₹) | Interest Rate (p.a.) |
|---|---|---|
| Allahabad Bank | 1000 | 3.50%-4% |
| Andhra Bank | 0/5//100/1000 | 3.50%-4% |
| Axis Bank | 0/10000/25000/100000/ | 3.50%-4% |
| Bank of Baroda | 0/5/1000 | 3.50%-4% |
| Bank of India | 500/5000/10000/20000/100000 | 3.50%-4% |
| Bandhan Bank | 0/2000/5000/25000/100000 | 4%-6.55% |
| Canara Bank | 500/1000 | 4% |
| Central Bank of India | 50 | 3.50%-4% |
| Citibank | 200000/ | 3.5% |
| HDFC Bank | 2500/5000/10000/25000 | 3.50%-4% |
| ICICI Bank | 0/1000/2000/2500/5000/10000 | 3.50%-4% |
| IDBI Bank | 500/2500/5000 | 3.50%-4% |
| IDFC Bank | 25000 | 4% |
| Indian Bank | 250/500/1000 | 4% |
| Indian Overseas Bank | 500/1000 | 4% |
| Kotak Bank | 0/2000/3000/5000/10000/20000 | 5-6% |
| Lakshmi Vilas Bank | 1000/3000/5000 | 4%-6.50% |
| State Bank of India (SBI) | 0 | 3% |
| Syndicate Bank | 0/100/500/1000 | 3.50%-4% |
| UCO Bank | 0/100/250/500/1000/1500 | 3.50%-4% |
| Union Bank of India | 0/20/100/250/500/1000 | 3.50%-4% |
| United Bank of India | 0/50/100/500 | 3.50%-4% |
| Vijaya Bank | 500/1000/2000 | 3.50%-4% |
| YES Bank | 0 | 5%-6.25% |
How to Bank Safely? Know your Bank
The collapse of Yes Bank has shattered the myth that banks can’t fail. The collapse of Yes Bank meant hardship for its customers, they faced a ₹50,000 withdrawal limit and had to line up in ATMS and bank branches.
Banking serves as the core of our financial activities. We should take a safety-first approach to this aspect. Yes, a customer’s deposits are insured up to ₹5 lakh per bank (raised from 1 lakh in Budget 2020). Let’s start with some precautionary measures that can help avoid a liquidity crunch or loss of savings if your bank fails.
- Don’t keep all savings tied up in one bank. Maintain savings accounts in at least 2-3 different banks and spread the money across these accounts. This should be regardless of whether the bank is public or private. This way, you have multiple options to fall back on in case one account gets frozen. We would recommend having account in 1 nationalised bank and 1 public sector bank.
- Have different family members bank with different banks. Even if one member’s savings get stuck, others can chip in to cover expenses
- Consider spreading the ECS mandates for loans, SIPs and other bill payments across different accounts. Have one primary and a secondary bank account, letting ECS mandates run from the primary bank account while linking investments to a separate bank account.
Related Articles:
Do you know Bank Charges on Saving Accounts, QAB, MAB
Consider the above factors before you choose a savings account. This will prove to be extremely useful in supporting your future saving plans.
