Savings Account is the foundation of all consumer banking relationships and therefore one of the most important and frequently used products in the financial services domain.
While in most cases, the humble savings account may seem like a simple decision to make, there are several considerations that one must evaluate before setting up an account.
Most banks would expect an account holder to maintain a certain account balance which is often termed as minimum Average Monthly Balance (AMB), those customers who are not able to maintain such a minimum balance are subjected to penal charges. As a result, prospective account holders are almost always on the lookout for a ‘Zero Balance’ account or simply an account that does not mandate any minimum balance to be maintained.
But let us see if such accounts are free of associated charges:
Banks offering such accounts expect customers to start their banking relationship with a minimum opening amount. This is done to make the customers transact with the bank immediately and enhance stickiness with a new bank account/ debit card/ net banking or the mobile application.
Debit card charges
Such accounts almost always come with ‘paid’ versions of debit cards whereby a customer has to pay one time as well as annual charges for holding such debit card.
Issuance of a cheque book
Currently on account of rapid rise in digital payments, some banks levy charges on issuance of cheque books.
Use of ATMs
Banks charge per transaction fee on the use of other bank ATMs after a threshold of 5 transactions per month. Beyond this limit, all cash withdrawals are charged @ Rs 20 per transaction and non-cash transactions are charged @ Rs 10 per transaction.
Charges for physical statements
As part of cost optimization, banks levy charges on issuance of physical bank account statements.
Most banks levy charges on subscription of SMS updates like balance update, transaction information etc.
Some banks charge for making calls to phone banking since they expect customers to make use of digital tools like Email, Chatbot etc.
Account closure charges
Some banks levy such charges in case one was to close the account within a stipulated time from the date of opening (generally 6 months).
Cash deposit charges
Banks levy fee on deposit of cash in home as well as non-home branches.
Several miscellaneous services like doorstep banking, issuance of certificates, replacement of cards, issuance of Demand Drafts etc come at a cost to the customers.
Therefore, it is important to refer the schedule of charges for your bank account before looking at only the Zero Balance / minimum balance requirement. It is often beneficial for the customer to subscribe to account which demand a minimum balance since they may come with several fee features which otherwise one may end up paying for.