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What to look when opening a Bank Account?

Demonetisation made us mandatory to use bank accounts. All you need to know when opening a bank account in India. Covered from choosing a bank, account type, minimum balance requirement (MBR), interest rates, fees, online, credit, to additional services.

What to look when opening a bank account?

All of us need a bank account for personal reasons. Such accounts are known as savings accounts where your money is safe and also earns you some interest. Money in a savings account is also very liquid and you can withdraw it any time you want. With the government's demonetisation initiative towards end of 2016, it made all to manage most transactions through non-cash means, where bank accounts play a major role. We tell you things you should look for before opening a bank account.

1. Choose a Bank

Choose a bank that is located nearby and accessible. It is recommended that you choose a public sector bank or a reputed private sector bank. Even though many banking services can be done online or through the mobile phone, you would still need visit a branch. Also, make a note of the bank timings, because some private sector banks open earlier and have longer working hours which may suit you. You may also want to choose a bank which has friendly employees and consider factors like how much of time you need to spend at a bank on an average to get work done.

2. Choose an Account Type

Find out the types of savings accounts offered by your bank. There are regular savings account and also privilege savings accounts with features like higher withdrawal limits, unlimited ATM withdrawals and a dedicated relationship manager.

3. Check Minimum Balance Requirement

Check your bank's minimum balance requirement (also known as MBR). This can be as low as Rs 1,000 or Rs 5,000 or Rs 10,000 and even Rs 25,000 for foreign banks. This balance may be arrived at based on your monthly or quarterly balance. Failing to maintain the minimum balance would lead to penalties of Rs 250 - Rs 350 per month or Rs 1,000 per quarter. A very high minimum balance can be difficult to maintain.

4. Check Interest Rates

Check the interest rates offered by your bank. Some banks offer higher interest rates on savings bank account of up to 6 or even 7 per cent, so you may be able to earn some extra interest.

5. Check Fees

Check all the fees associated with a bank account. These fees may seem small but all of it add up. Some banks will charge you an annual fee for their debit card. Most banks, however, waive this fee. There are also several charges you may have to pay as penalties. For example, you need to pay a penalty when a cheque bounces. There are also charges for issuing a cheque book, stopping a cheque payment and so on. All these charges are mentioned on the bank website, so it is important to read the fine print carefully. Remember, that some of these charges are higher for private sector banks, but they often provide better service than public sector banks, so it is a choice you have to make.

Quick Facts

  • Every public sector, private sector commercial banks are covered under Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly owned subsidiary of the Reserve Bank of India (RBI).

  • Each depositor in a bank is insured upto a maximum of ₹ 5,00,000 for both principal and interest amount held by the depositor.

6. Additional Services

Find out about all the other services the bank offers, because you might need to use allied services as well. For example, you may want a bank with a locker if you want to store your valuables safely. Most banks also bundle other services like a demat account, investment services and sales of gold and mutual funds through the bank. Also, check the types of credit card offered by the bank and their features.

7. Online Services

Nowadays, we do most of your transactions either online or through our phones. All banks would offer you internet and mobile banking facilities, but the quality of these services differ. Choose a bank which offers good quality internet and mobile banking services. You can check out reviews of such services online.

8. Credit Services

Find out about credit services offered by your bank. Going ahead, you may need to avail loans and some banks offer lower rates of interest to its existing customers. Know more about the personal loans, home loans and car loans that your bank offers.

Conclusion

Individual preferences play a major role in opening a new bank account. Whatever is your choice try to stick to the bank for a while. Important to understand that opening and closing bank accounts will impact your credit history.