Some banks declare aloud that by opening a savings bank account with them, you will get a higher rate of interest than what other banks are offering. However, before opening such an account, you should know exactly which type of savings accounts they are.
Savings bank accounts are of many types, namely Normal Savings Bank Account, No Frills Account, Salary Account, Privilege Bank Account, Children Account, Women Account, Senior Citizen Account, Sweep-in or Multiplier Account and so.
The main purpose of opening a savings account is to keep money safely with adequate liquidity, so that money may be withdrawn whenever needed and also earn some interest on the deposits. A normal savings bank account exactly does that, however, with some restrictions on number of free withdrawals and requirement of keeping minimum monthly balance to avoid penalty.
No frills accounts are also similar to normal savings account, but, as the name suggests, there is no condition of maintaining minimum balance. However, is such accounts, there are stricter restrictions on number of monthly transactions, limit on maximum balance and limit on credit transactions.
Holders of salary accounts enjoy relaxed rules on number of free monthly transactions and maintaining minimum monthly balance along with enjoying some other benefits.
Holders of privilege account enjoys additional and preferential benefits by maintaining a higher monthly minimum balance.
As the names suggest, children account, women account and senior citizen account are for specified persons and have features more suitable to the intended customers.
The sweep-in or multiplier accounts provide higher interest earnings along with high liquidity by linking savings bank accounts with fixed deposit accounts. Linking of the two types of accounts facilitates auto transfer of balance from one type of account to the other to ensure that high account balances never lay idle.
Whenever the balance in such an account crosses over a predetermined level, FDs are automatically created out of the surplus amount in multiples of sums stipulated by the bank for a specified tenure.
Similarly, whenever the account balance falls below the predetermined level, automatic reverse sweeps of the FDs get triggered in multiples as stipulated by the bank.
The banks broadcasting the higher interest, are actually offer sweep-in or multiplier accounts, but don’t reveal in their advertisement on media, the predetermined level, over which, the higher interests are given, so it looks like that these are normal savings bank accounts and would provide the higher rate of interest on entire deposit amount.
So, before getting lured by advertisement of any other bank, ask your own bank if sweep-in or multiplier account facility is available there or not. Then compare among the banks the predetermined levels, over which you would get higher interest and how much the rate of interest different banks are providing on the surplus balance, before opening such an account.
Open such an account only if you are going to keep higher balance over and above that level, above which, you would get the benefit of higher interest. Otherwise, any normal savings bank account would be better suited to fulfill your need.