How to juggle your savings accounts

Holding multiple savings bank accounts is quite common. While one account could be a zero-balance salary account with nil charges for many transactions, the others may be normal savings accounts. Having many accounts adds to your costs. Here’s what you should know :

When we shift jobs, we often retain our old salary accounts, which then turn into a normal savings account. But a lot of free perks associated with a salary account vanish into thin air once your account becomes a regular savings account. Many transactions, such as online transfers (NEFT), additional cheque books within a quarter or issue of demand draft, that were free for a salary account, become chargeable for a regular account.

All banks generally charge ₹2.5 per for money transfer (NEFT) up to ₹10,000 and ₹5 for transfers between ₹10,000 and ₹1 lakhs. ICICI Bank offers only 20 cheque leaves free for a single quarter and charges ₹20 for every additional cheque book of 10 leaves in its regular savings account; whereas, for an ICICI Bank salary account-holder, there is no cap on the number of cheque books.

HDFC Bank issues free demand drafts up to ₹25,000 for salary account holders. For a regular savings account, however, it charges ₹50 for a DD up to ₹10,000 and ₹5 per thousand thereafter.

While most salary accounts are zero-balance accounts, you must also maintain a minimum monthly average balance in a regular savings accounts which would range between ₹2,000 to ₹10,000 depending on the location. A penalty is levied if you fail to maintain this average balance. Axis Bank requires you to maintain an Average Monthly Balance (AMB) of ₹10,000 if you live in a metro city. It levies a penalty of ₹10 for every ₹100 shortfall in the required balance or ₹350, whichever is lower, if you fail to maintain the balance.

You must also spare a thought as to how you would route your auto debits.

When you switch jobs, you can transfer monthly sums from the new salary account to the old bank account and continue the regular operations. That way, if you have mapped all your investments, loan repayment, bill payments to the old account, you are saved the trouble of intimating the change in bank account to these institutions and going through all the related procedures.

Otherwise, you can route all your auto debits to the new salary account. Transferring the investments and other payments to the new salary account may take time. But the big advantage is that since the salary is getting credited to this account, you don’t have to worry about missing any payments or transfers due to lack of funds. Satyam Kumar, Co-Founder, Loantap says: “It is always better to map all your investments and payments to the salary account. The other accounts should only be your backup account. This can be used only when you have trouble in operating with the base bank at times like, say, when your debit card is lost or stolen.”

For reasons of convenience, you might open an alternative bank account. But do your homework to see if you can sign up with banks that are more generous. Sahil Arora, VP & Head of Payments Products, Paisabazaar.com says: “New-age banks like IDFC Bank and DBS offer products with zero charges. IDFC offers to open a savings account online with no transaction charges and unlimited free ATM withdrawals across any bank network. Digibank by DBS, also offers a zero balance account with unlimited free ATM transactions”.

In order to reduce your costs, experts suggest that you need not accept to avail a debit card from the alternative account. Since a debit card comes with a charge, you could instead go only with the ATM card for the second account .

You can also save on charges for non-maintenance of minimum balance by opening a zero balance account available with many banks now. For example Kotak Mahindra Bank’s recently launched Kotak 811, IndusInd Bank’s Indus Small Account and SBI’s Basic Savings account are a few that allow you to maintain a zero balance even in your regular account.

But remember in these cases, while the charges on maintaining the average balance will be saved, other charges that are applicable to a regular savings account will still be levied.

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