Home ACCOUNTING Planning to Open a Bank Account? Here’s what You need to Know!

Planning to Open a Bank Account? Here’s what You need to Know!

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The thought of dealing with banks sounds tricky but it really isn’t. A guiding route will help you plan and make the right choices for opening a  bank account. Whether you’re a college student, a housewife, or a retired professional a bank account in today’s world is definitely a must. 

 

I am sure you have a bunch of things you wish to consider while opening a bank account which is why this article will guide you through in the easiest possible way to your destination of correct decision making! 

 

Types of Bank Accounts Available in India

There are quite a few types of accounts offered. It is best to learn about them as much as possible. So that you can select any of these accordingly. 

Savings Account

A regular deposit account with a minimal rate of interest is a savings account. Other features that are a part of this account are, the number of transactions or the amount being withdrawn is limited. Even though the number of deposits does not have a restriction on. The interest rate on a per annum basis ranges from 4% to 6%. Savings account holders can have access to debit cards/Rupay card/ATM cards if they wish to. The people who majorly opt for savings accounts are students, professionals, and pensioners. 

Savings Account

Now, under this type are several more kinds of savings accounts. You can choose from a range of products. There’s a zero-balance savings account, an advanced one with auto swipe, debit cards, bill payments, and cross product benefits. Along with regular savings, savings for children, institutional savings, for women and senior citizens, etc. 

 

 Savings accounts can vary depending on who is opening an account and for what reason. It will differ from person to person depending on their age, purpose of the account, etc. Savings account does not require you to maintain a minimum balance.

Current Account

A trader, business owner, institutions, companies, and entrepreneurs needs to deposit and withdraw money as and when required. Therefore, as the name suggests, a current account comes with the flexibility to withdraw or deposit money as and when required. Which is exactly why this is an account especially for business related transactions. There are no limitations to the number of transactions per day. They hold more liquid deposits and allow overdraft facilities also. And you must maintain a minimum balance to operate your current accounts. Unlike savings accounts this is a zero interest account.  They have no fixed maturity and have internet banking facilities available. 

Fixed Deposit Account 

Fixed deposit accounts are popular because of its decent interest rates. Here, the holder of the account must deposit a certain sum of money as per their desire for a fixed period of time. Fixed deposit accounts do not allow its holder to withdraw any amounts of money before the period of maturity. The money withdrawn can only be done in lump sum and not in installments. This period of maturity can range from 7 days to 10 years. Even though there are some banks that allow premature withdrawal at lower interest rates. Though the rate of interest can vary depending on the tenure of your FD account. 

 

Salary Account 

This is an account that is opened by a tie up between the employer and employee. Every employee receives their salary as per their beginning cycle in their salary accounts. You can choose your bank, as per your preference to have your salary account made.

Salary Account 

 

The bank you choose will also maintain a reimburse account for you. Your reimbursement account is where you will be receiving all your allowances at. 

 

Recurring Deposit Account 

This deposit account has a fixed maturity date and the holder of the account must keep depositing a certain sum into the account until that date. This account too has a decent rate of interest, but the interest rate can vary from bank to bank These depositing intervals can be in months or quarterly. Unlike an FD account, you don’t need to deposit a huge amount at go. Here the amount deposited can be quite small (as low as INR 50). And can be deposited frequently. There are certain restrictions such as the amount being deposited every interval cannot be changed. In case you withdraw your money before maturity you will have to suffer a penalty.  A person or an institution can jointly or separately open a recurring deposit account. The maturity period can range from 6 months to 10 years. 

 

Now, these are the most basic types of bank accounts available. There are several more bank accounts available in India. You can open any bank account as per your choices. 

 

Things to Check before opening a Bank Account: The Basics 

Every account has pros and cons that suit their holder. Deciding to open a bank account without researching it well may be non-benefitting for you in the long run. Therefore there are a bunch of basic things to check before you decide to open a certain bank account. Those are, 

  • The interest rate offered by the bank. Since a lot of factors come into play when it comes to interest rates. Comparing every product plan with each other will help go for the best one.
  • What is the minimum balance to be maintained in the account. Not being able to maintain a minimum balance will subject you to penalty. You need to know about the penalty amount also. Therefore, this is certainly a point to check before opening an account in any bank. 
  • Are there any limits on cash withdrawal on a per day basis? How many times are you allowed to deposit any sum? 
  • Are there internet banking facilities, applications (of that bank) or other online mediums to access and freely use your account? 
  • Are there any charges applicable on any collection facilities that the bank offers, and so on. 

 

It is always nice to be one step ahead in life. So what’s the harm in knowing a little more right? 

Documents You’ll need

  • Address proof
  • Pan card details 
  • Passport size photos
  • Details of any existing account holder with that bank. 

 

Choosing The Right Bank Account for YOU

Choosing the right bank account has been the only motive for this article since the very first. So in this last segment of the article, I’d like to brush over a bunch of things to consider while choosing the right bank account. 

Choosing The Right Bank Account for YOU

Location 

 

While choosing a bank to open your bank account, make sure it is close to your location since transactions occurring through banks in closer vicinity charge you less. 

ATM 

The free usage of atm is not a real thing anymore. You will be charged for exceeding your transaction limit. Also using other bank’s ATMs will charge you more. But then again there are some banks that allow you unlimited atm withdrawal. Therefore, you have to be on a look out for those. 

 

ATM

 

Branch Availability & services 

Well, there are many bank branches that are not available and also do not provide good quality customer service. This is something to consider since this criteria will be beneficial for you in the long run. If in the future you face some bank account issues, it is better to have a branch that can help you through times like that as fast as possible. 

 

Conclusion

With this, I would end my article. I hope my readers had a clear image of how to rightly make a decision on their bank account choices.  

 

READ THIS ALSO : 5 activities related to property investment loans you must avoid

1 COMMENT

  1. You made a good point that knowing the daily cash withdrawal limit would be important to consider when opening a banking account. A friend of mine is thinking about having a new savings account that she will use to build up her funds for a new car. I think it’s wise of her to have multiple accounts depending on the things she would spend her money on.

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