A savings account is indeed a safe way to accumulate money since it offers interest rates and other benefits. However, it is equally crucial to consider the fees and charges associated with a savings account. It is important to know about these charges, as they are deducted from your savings.
AMB charges:
Banks impose an Average Monthly Balance (AMB) requirement for savings accounts. This means that the account holders have to keep a certain average balance for a month. If you fail to maintain the required threshold, the bank charges a penalty. It is often referred to as a non-maintenance charge. These charges vary across banks and on the type of accounts.
Solution:
You can opt for opening the best zero-balance account online, as they do not require minimum balance to avoid charges.
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ATM-related fees:
ATM fees help cover the cost of maintaining services and vary by transaction type and usage. The Reserve Bank of India (RBI) allows up to five free transactions from your own bank’s ATMs and three to five from other bank ATMs, depending on location. After exceeding these free limits, a small amount is applied for financial and non-financial transactions to support ATM infrastructure.
Solution:
Use your own bank’s ATMs as much as possible to avoid extra charges. Plan your withdrawals to stay within the free transaction limits. You can also opt for digital banking services such as UPI, which can help reduce the need for ATM visits.
Wire transfer fees:
Wire transfer fees help cover the cost of providing services like NEFT, RTGS and IMPS. They enable safe and quick money transfers, with fees varying based on the transfer method and amount. NEFT is typically used for smaller amounts and charges a minimal fee depending on the transaction size. RTGS, used for larger transfers, comes with a slightly higher fee, while IMPS, which allows instant transfers even for small amounts, has a nominal fee structure. The fees support the infrastructure needed to process these transactions securely and efficiently.
Solution:
To minimise costs, prefer NEFT or IMPS for online transfers, as many banks waive these fees for digital transactions. Use RTGS only for large transfers and check if your account type qualifies for fee waivers on certain transfer methods.
Card-related fees:
Annual account related charges depend on the type of card you have.
If you withdraw cash using your credit card, you’ll pay a cash advance fee and interest kicks in right away. Missing a payment can result in a late fee, which also affects your credit score. International purchases may come with foreign transaction fees, and if you go over your card limit, you could face an over-limit fee. Lastly, some cards charge a dynamic currency conversion fee when you make payments in Indian currency abroad.
Solution:
Choose credit cards with zero annual fees or cards that offer a fee waiver if you meet certain spending criteria. Avoid cash advances whenever possible to save on high fees and immediate interest charges. Pay your card bills on time to avoid late payment fees and prevent a negative impact on your credit score. If you travel frequently, opt for cards with low or no foreign transaction fees to save on international purchases.
Chequebook and statement charges
Chequebooks and bank statements are very useful in managing your money. Chequebooks enable you to make safe payments without cash, while bank statements give you a clear record of your transactions to aid in tracking spends. Some banks may charge a fee for issuing chequebooks after a given number of free ones. It also involves charges like cheque return charges due to bad funds, stop payment charges, or for issuing a duplicate cheque. For paper statements, the banks may charge a small fee to cover the costs of printing and delivering the statements.
Solution:
To avoid chequebook charges, consider using digital payment methods like UPI, which are free and convenient. Also, ensure you always have sufficient funds in your account before issuing cheques. For statements, go paperless by enrolling for e-statements since they are usually provided free of charge and are environment friendly than those provided on paper. Also, keep a check on your account transactions and charges so as to avoid unwanted charges such as cheque bounce or duplicate issuance charges.
Final note
To reduce bank fees for transactions such as use of cheques, ATM, and account maintenance, one has to monitor their account, choose the right banking products, and embrace digital products like UPI and e-statements. It is wise to be smart and precautions when carrying out banking activities as it not only saves your money but also makes work easier when handling your finances.
