If you're planning to open a new bank account, you might be interested in knowing the differences between a zero-balance account and a regular account. Both types of accounts offer distinct features and advantages, but it's crucial to comprehend their differences before selecting one. In this article, we'll explore the details of both accounts to help you make an informed decision so let's dive in.
What is a Regular Savings Bank Account?
A savings account is a type of deposit account that you can create with a bank to store your funds. The balance in this account earns interest, albeit at a lower rate than Fixed Deposit (FD) accounts. Nonetheless, you can still earn returns on the balance in your savings account. In addition, regular savings accounts come with a minimum balance requirement.
This means that you must maintain a minimum amount in your account at all times. If your account balance drops below the minimum limit, the bank will impose a penalty for failing to maintain the required minimum balance. The minimum balance requirement varies between banks and typically ranges from ₹10,000 to ₹15,000. However, some premium bank accounts may require a minimum balance of ₹30,000 or more.
What is a Zero-balance Savings Account?
Have you heard of a zero-balance savings account? It's a type of bank account that you can open without worrying about keeping a minimum balance. This is especially great if you're someone who wants to save some money but doesn't have a lot to start with. Just keep in mind that you may not have access to all banking services and there might be some restrictions on transactions. Nonetheless, a zero-balance savings account can be a pretty cool option for anyone who wants a fuss-free account.
Zero Balance Account vs Regular Savings Account: What are the Differences?
1. Minimum Balance Requirements
When it comes to savings accounts, there are typically two types: regular savings accounts and zero balance accounts. The biggest difference between them is the minimum balance requirement, obviously. With a regular savings account, you'll need to keep a certain minimum amount in your account to avoid any penalties. On the other hand, if you go for a zero balance account, you can keep a big fat zero in your account without any worries. Pretty sweet, huh? Just be aware that you might not have access to all the bells and whistles that come with a regular savings account.
2. Limit the Number of Account Openings
If you're someone who likes to spread their savings around, you might be wondering if there's a limit on the number of savings accounts you can open. Well, when it comes to regular savings accounts, you're free to open as many as you like with different banks across the country. But if you're thinking of opening a zero-balance account, keep in mind that the RBI only allows you to have one. Yup, just one. So, if you already have a zero balance account, you'll have to close it before opening a new one. Better stick to regular savings accounts if you're a serial saver!
3. Foreign Remittances
If you've got a regular savings account, you can totally use the money in there for foreign transactions. But beware, there might be some foreign transaction fees charged by your bank, so keep an eye out for that. But if you're rocking a zero balance savings account, you won't be able to make any foreign remittances. Best to stick to regular savings accounts if you've got your sights set on global money moves.
Which One Should You Choose?
So, now that you know the ins and outs of these two savings accounts, it's time to make a decision. Basically, if you're not a fan of the whole "keeping a minimum balance" thing, best zero balance account might be the way to go. You can earn some interest without any of the fuss. But if you're already on team zero balance and need to open a new account, you'll have to go for a regular savings account. Hope this makes your decision-making process a little bit easier!
And there you have it, folks! Hopefully, this breakdown of the differences between zero balance and regular savings accounts has helped you make a decision. As you can see, both types of accounts have their own unique features and benefits. It's all about finding the one that suits your financial goals and lifestyle best. So, go forth and choose wisely!
Naina Rajgopalan has a thing for numbers and a deep fascination to learn about all things finance. She's been money-wise from a young age and has always shared her knowledge and tips with those around her. Being a part of the content team at Freo Save, a digital savings account that offers up to 7% interest rate on savings along with benefits such as insurance on balance, safe & secure banking, and so on. Naina stays updated with the latest of what happens in the banking and fintech industries. She has taken upon herself to share her knowledge with readers across all walks of life to help them manage their finances and budgets better, so they can make better decisions while spending, borrowing, investing and saving.