The Buyt Desk
Almost all Indians have at least one savings bank account but most of them do not know about the service charges that the bank charges for the service provided.
In India, one of the most popular banking products is a Savings bank account. More than 80% of India’s population has a minimum of one operating savings bank account so creating and operating savings bank accounts is easy. Nowadays all operations are digital and this makes accessing and transacting much easier. So while opting for a saving bank account, people just compare the interest rates as the rest don’t matter much. They ignore the service charges the bank charges for the service they provide for operating the savings bank account. Few services like monthly email statements, chequebook of fixed leaves, mobile banking, and internet banking are free of cost and the rest are chargeable. Be aware of the charges so that you can plan and save on them. These charges differ from bank to bank. Let us look into a few of the chargeable services of savings bank accounts.
Charges for not maintaining Minimum Average Balance (MAB)
Customers need to maintain a prescribed average balance in their Savings Account. Some banks ask for an Average Monthly Balance (AMB) and some ask to maintain Quarterly Monthly Balance (QMB). And this minimum balance value differs from bank to bank. For not maintaining a minimum balance in your savings account, banks may charge anywhere between Rs 100 to Rs 800. Some banks also have savings accounts which do not need maintaining a minimum balance and are known as zero balance savings accounts.
Debit card charges
Nowadays all banks provide debit cards to all savings bank account holders. Banks charge some nominal fees to issue a debit card. Also, an annual maintenance fee is also charged based on the card type. These charges depend on the bank, card type, account and service offered and range from Rs 100 to Rs 800. Personalized debit cards with account holder’s photographs may be charged more than the regular debit card. Even replacement and reissuing of debit cards is also a chargeable service.
Issuance of duplicate Passbook
You will get a free passbook with your new savings account. But if you misplace your passbook or lose it, you will have to pay for a duplicate passbook. Some banks even charge per entry into a duplicate passbook. These charges depend on the bank.
Cheque book charges
Banks provide a free cheque book with 20-25 leaves to every savings bank account holder every quarter. If you need more leaves in the same quarter you have to pay per cheque book. The charges depend on the number of leaves you have asked for and it varies from bank to bank. Premium account holders who maintain a higher balance might not be charged for extra cheque books.
SMS alert charges
The savings bank account holder can opt for customized SMS alerts and this is not mandatory. This SMS notification service is a charged service provided by the bank. Every transaction is notified to the customer in the form of SMS. The charges are quarterly and vary between Rs 10 to Rs 20 per quarter.
Internet banking fee
The high-value online transactions carried on savings bank accounts are chargeable. Electronic fund transfer systems like RTGS (Real Time Gross Settlement Systems), IMPS (Immediate Payment Service) and NEFT (National Electronic Fund Transfer) are chargeable services. The charges are capped on the transfer amount and charges by each bank are different.
Cash transaction charges
Few banks charge over cash transactions. Usually, the first four free transactions in a month are free and Rs 5 is charged per Rs 1000 transferred.
Account closure charges
If you want to close your savings bank account within a year of opening it, the bank may charge you account closure charges. The charges depend on the time period since the opening of an account. Each bank has its own charges ranging from Rs 200 to Rs 1000.
Cheque bounce charges
When the cheque you have deposited or issued bounces, you will be charged a cheque bounce penalty. The cheque issuer will be charged higher compared to the depositor. Both parties need to pay the penalty. Each bank defines its own cheque bounce charges. If it is bounced because of the bank’s error then the penalty will be repaid to the customer.
Foreign land charges
When you are travelling outside India and use your savings account to convert INR to foreign currency, you will be charged a currency conversion fee. When you use your debit card in a foreign country to make payments, you will be charged a foreign transaction fee. When you use your debit card in a foreign country to withdraw money, you will be charged a foreign ATM withdrawal fee.
Summing up
Do not ignore checking your bank statement weekly if there are many transactions, or at least monthly. Check the charges bank as auto-debited from your account. If you find any discrepancy, immediately get it rectified with your bank manager. Analyze and plan your transactions such that you can save yourself from the bank charges in future. The charges vary across types of accounts and banks. Before opening an account with the bank you can check the charges of all banks and then decide on the bank so that you can save money.
