7 Smart Things To Know About A Zero-Balance Savings Account

A savings account is the most preferred form of deposit amongst everyone. Over time, it has undergone a significant facelift and is the epicentre for all banking activities. The important uses of savings account are:

Saving money and earning interest on the same

Issuing cheques for payments

Transfer of funds from one account to the other over the internet and mobile apps

Debit cards for cash withdrawal from anywhere across the country

Paying off debts such as EMIs and credit card bills

Every savings account requires you to maintain a minimum balance every month. The interest you earn depends on the balance you maintain. If the balance falls below the prescribed limit, you have to pay the penalty. Doing away with this trend is one of the types of savings account called zero-balance savings account.

What is a zero-balance savings account?

It comes without strings of minimum balance maintenance. They are specifically offered to salary account holders and based on Pradhan Mantri Jan Dhan Yojana – a Government launched the scheme.

Before applying for it, you should be aware of the following facts regarding zero-balance savings account:

Balance maintenance: They score over regular savings account thanks to no minimum balance maintenance concept. Usually, regular savings account holders have to pay fine for not maintaining the desired amount as balance. However, that is not the case with zero-balance accounts.

Secondary account: RBI has directed all banks to offer zero-balance account to the applicants. You can use it as a secondary account to manage your regular savings account efficiently.

Interest rates: The interest rate remains the same as a regular savings account. Zero-balance savings account includes other features such as free ATM/debit card, free cheque book, complimentary passbook, access to the internet or online banking, a specific number of transactions, and unique privileges to salary account holders.

Eligibility: The eligibility criteria vary from bank to bank. It is highly dependent on the income and age of the applicant. However, banks are not allowed to impose age and income restrictions on the applications as per RBI mandate, especially for zero-balance accounts.

Limited transactions: RBI has not imposed any restriction on the number of deposits or withdrawals. The maximum limit for withdrawal per month is four. The withdrawals can be from anywhere be it ATM, RTGS, NEFT, standing instructions, EMIs, etc. It sometimes depends on the banks if they want to offer additional withdrawals to the applicants.

One account: You cannot convert your existing account into a zero-balance savings account. You may open a new one. If you hold a regular account, you can close that within 30 days of opening a zero-balance savings account. Else, the bank will close it on its own in 30 days.

Shashank Bhaskar is an MBA student and financial advisor in Mumbai.he shares his financial experience and guides you about all your financial queries.in this article, he is explaining the 7 Smart Things you have to know About A Zero Balance Savings Account

Shashank Bhaskar is an Mba student and financial advisor in Mumbai.he shares his financial experience and guides you about all your financial queries.