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Top Three Things to Know About Bank Accounts

A large chunk of Indian population does not even know that bank account is a necessity in day-to-day activities involving monetary transactions. For many people, a bank account does not play any role other than safe-keeping of money. Here is an article that explains why, how and what of bank accounts, the article being mainly targeted at school children, college students, and house keeping moms.

1. Why you need a bank account

Nobody needs to tell you that handling cash is not safe, as your cash is prone to theft and loss in transit. Besides the safety of your money, cheque is the most important requirement in almost all the financial transactions. Saving account in a bank and cheque transactions offer lot more convenience than cash transactions. Moreover, as per Income Tax and Rules, it is mandatory to carry out cheque transactions for almost all the financial activities in your day-to-day life.

You cannot pay cash more than the maximum amount specified by the Income Tax Department for payment of school or college tuition fees, buying a motorcycle, payment of insurance premium etc. Moreover, most of your income such as scholarships, salary, gifts etc, comes to you in the form of a cheque instead of cash. For availing cheque facilities, you need to have a saving account in a bank. In the modern banking, bank accounts make your life much easier by way of ATM and Debit Cards and online banking facilities.

2. How to open a bank account

First of all, you should know that there are two basic types of bank accounts saving and current. Saving accounts are for ordinary consumers and current accounts are for business people. In order to open a bank account, you have to fill up saving account opening form along with which you need to submit a proof of identification such as driving license, college identity card, PAN card, passport or voter's identity card and a proof of residential address such as ration card, electricity bill etc. Moreover, depending upon the bank, you have to deposit certain minimum amount at the time of opening your saving account.

3. What are the most important things to know while opening a bank account?

1. Mode of holding: In all the bank account opening forms, there is a column that asks you to specify mode of holding, single, joint or E/S (either or survivor). Mode of holding specifies how you will operate the accounts and who will sign the cheques. Besides, it is advisable to open joint or E/S accounts, as it saves you from lots of hassles especially in case of unfortunate death of the first holder.

2. Types of accounts: In savings accounts, you have several choices depending upon the bank. Nowadays, many banks offer premium services and facilities depending upon your requirements. Easy Access, Classic, Saving Max, Saving Plus, and Silver are few of the names of modern saving accounts. However, if you are a beginner, you should go for ordinary or 'No-Frills' savings accounts, which offer all the basic facilities without any extra charges.

3. Nomination: It is a facility that allows the legal heirs and survivors to claim the money of the deceased person in case of unfortunate death of the account holder. You must positively fill up nomination form at the time of account opening. Please keep in mind that you can always add, cancel, or modify the names of nominees any time after opening the accounts. Nomination forms are available with all the banks.

4. Minimum Balance or AQB Requirement: Before you open bank accounts, find out what is the minimum balance amount that you must always keep in your bank accounts. Many banks call it by alternate name such as AQB - Average Quarterly Balance. Most of the banks levy heavy penalties and charges if you do not maintain minimum balance.

5. Charges: Make sure that you study and compare the schedules of various charges of banks. Generally, the banks levy various types of service charges and fees such as minimum balance penalty, cheque book charges, ATM/Debit Card annual fees, ATM transaction charges, outstation cheque clearance charges etc.

6. Choice of bank: In most of the cases, the choice of bank should be based on the location and convenience. You should open saving account with a bank that is situated closer to your normal place of residence. With the advent of Internet Banking and ATM/Debit Cards, you can operate your accounts anytime and from anywhere; however, keep in mind that the banks charge you for almost all the services that are carried out at a branch other than Home-Branch where you have opened your account.

Summing Up:

Please remember that a bank account is a necessity in the fast-paced and tech-driven society. Without a bank account, you may have to face lot of obstacles in your day-to-day life. If you do not have a bank account, you must look out for any bank nearest to you and find out the details about opening a new saving bank account.

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