Overview
Banking experience has reached a new level after the implementation of Jan Dhan Yojana, that allows anyone to open a bank account. With so many banks, offering a savings accounts with different products depending on the services provided, it can get really confusing to choose a suitable bank.
Here a are a few thing you should cross off your list while zeroing in on a bank .
Location
Opt for a bank with a convenient location. A centralised and well-connected location is better than any bank situated in the far corner of a suburb. Most of the banks have moved to core banking that enables you to deposit, withdraw or make any other transactions at any branch. However, not all the branches are connected so home location is anyway a better option.
Charges Incurred
Look out for the banks that incur charges for their services and bomb you down with penalties. Like, last year banks reduced the usage of ATMs to a certain number per month, any further usage levies charge. In the case of cheque bounce, PSU bank charges a nominal Rs. 50-100 but a private bank could fine you between Rs. 400-500. Compare the charges that banks levy on the issuance of the chequebook, cancelled cheque, issuing a duplicate statement or passbook, and signature verification for the third party.
Some banks also charge you for requesting more than four chequebooks a year. Also, even while redeeming your credit points you may have to pay extra. The additional costs levied by private banks is a trade-off for better and efficient services but sometimes poor services are delivered by PSU banks.
Average Balance Requirement
All the banks require maintaining an average or minimum balance in your account. This can range from Rs. 1,000 in the case of government banks and rise as high as Rs. 25,000 concerning foreign banks. The minimum balance requirement is calculated on the monthly or quarterly basis and if your accounts fail to show this, you are slapped with a penalty. The penalty depends on upon the type of bank it can range from Rs. 350 a month to Rs. 1,000 per quarter.
Also, your savings account earns 4-6%, while it could earn higher returns somewhere else. Because of this, the race for cheap capital is making banks sweeten their offers, like State Bank of India, dropped the minimum balance requirement for their savings account customers and many other banks may follow the suit.
Online Banking
These days most banks offer internet banking, with improving and upgrading services and features to meet their counter competitions. Before opening an account check if the bank has this facility and whether it is free or not.
Interest Rates
The RBI has allowed banks to offer a minimum of 4% interest rates on your savings account. So if you look around, it is possible to get as much as 6-7% interest rates for your money. Given that, up to Rs. 10,000 earned through the bank is tax exempted, this is a good instrument for investment.
A better option, least known, is the auto-sweep facility, which combines the liquidity of your savings bank account with the higher interest rates of fixed deposit. Whenever your bank balance exceeds a certain limit, the excess fund is transferred to your fixed deposit. But these investments remain locked or unavailable for withdrawal for a certain time limit.
Apps
Banking apps have been launched by the majority of the banks, excluding the local banks. Make sure your bank uses a user-friendly app and allows to make bill payments easily.
Working hours
Some private banks open between 8:30-9:00 am, while the PSU banks usually don’t open until 10 am. There are banks that remain open till late evenings. Even better are those banks that remain open on Saturdays and Sundays. The branch timing is the really important point of consideration for customers who are not yet into net or mobile banking services.
Choose a bank that fulfils your necessary criteria. Going for a famous bank may not help in the long run. Look for banks with good interest rates and less extra charges.
