What Is A Minimum Balance Savings Account?

By | August 6, 2018

How does a minimum balance Savings Account differ from a zero balance Savings Account? Let’s find out.

What Is A Minimum Balance Savings Account?

Opening a Savings Account is one of the first steps towards cultivating a habit of saving money. More importantly, it’s easy to open one these days and to operate it. With a cap on cash transactions, it has become even more necessary to open a Savings Account or two to perform financial transactions.

With most banks offering net banking facilities on your Savings Account, you can conduct all your financial transactions online and without having to go to the bank. The net banking option can be activated on your account with just an iPIN and you’re good to go. This way you can transfer funds online through either NEFT, IMPS or RTGS from the comfort of your home.

Additional Reading: Money Transfers: NEFT, RTGS And IMPS Explained

Opening a Savings Account for your money is a much better option than locking it away in your house. Moreover, money kept in the house is a depreciating asset. Keep your money in a Savings Account and earn interest on it. With a Debit Card in your wallet and ATMs around every corner, you’ll have 24/7 access to your funds.

Not many products in the market give you the dual benefit of liquidity and interest. Once you open a Savings Account, you can use it to better manage your money and realise your short-term financial goals with ease.

Additional ReadingTop 6 Savings Bank Accounts Of 2018

All Kinds And Colours

There are all kinds of Savings Account options made available by banks. There are Savings Accounts for kids, women, pensioners and much more to suit the lifestyle and financial needs of people from all backgrounds.

Additional Reading: Top 5 Savings Account Schemes For Women

Looking at Savings Accounts broadly, there are two kinds:

  • A minimum balance maintenance account
  • A zero balance Savings Account

Let’s look at the difference between the two:

Minimum Balance Savings Account

Some Savings Accounts have a mandatory minimum balance requirement. This means that the account needs to hold a sufficient bank balance for it to remain active.  Many banks insist on having a certain minimum amount in the account to either open one or for the account to be functional.

Therefore, the “minimum” or “average” balance has to be maintained over a certain period of time as well.  The calculation of this “minimum amount” is done by adding up the everyday balance in the account and further dividing it by the number of days in that defined period.

If you do not maintain the specified balance requirements, you will have to pay a non-maintenance penalty.

Additional ReadingWhat Is Monthly Average Balance In Savings Account And How To Maintain It? 

Zero Balance Savings Account

Almost all major Indian banks now offer Basic Savings Bank Deposit Account (BSBDA), or in other words, a zero-balance account. No penalty will be levied and you can use your BSBDA account as a normal Savings Account.

A zero balance Savings Account is one where the account holder is free to operate the account without the need to maintain a minimum balance.

Usually, this kind of account is made available to salaried customers or salary account holders who get a monthly salary credited to their account. Based on the Pradhan Mantri Jan Dhan Yojana (PMJDY), which is an initiative by the Government of India that demands for financial inclusion, banks need to offer a zero balance Savings Account to their customers.

Go in for public sector banks if you want to open a Savings Account with a low minimum balance. Once you’ve opened a Savings Account, the next step is to open a Fixed Deposit to invest your savings. Check out our Fixed Deposit rates. You are sure to find an option best suited for you.

Additional Reading5 Things To Know About Zero Balance Savings Account

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