If you are a student keen on starting your financial journey, opening a bank account could be the first step. A bank account guarantees the safety of money and helps develop financial management skills. With a bank account, you can move and receive money conveniently through the Internet and mobile banking. You can also carry out offline monetary transactions through cheques or cash withdrawals.
While the importance of a bank account cannot be denied, it boils down to choosing the right one for your unique needs. But with banks offering several accounts to suit every need, you have plenty to choose from. A zero-balance savings account could serve your purpose well. Think of it as the best financial tool out there for students. Let’s explore why.
But before that, let’s discuss what a zero-balance account is for a better understanding.
What is a Zero Balance Savings Account?
It’s a no-frill arrangement that allows you to open and maintain a bank account at zero balance. The minimum balance requirements do not exist in a zero balance account, as it doesn’t require you to maintain any balance. The financial instrument is designed for people who are either starting their financial journey or can’t afford a regular bank account. These include students, low-income individuals, rural folks, women, senior citizens, or anyone seeking basic banking facilities.
Let’s get on with why a zero balance is so valuable for a student.
Skip the Penalties Outright:
In a regular savings account, minimum balance requirements are applicable. When your funds fail to comply with it, penalties come into play. Subject to the bank and account, these can be up to 6% of the shortfall. Conversely, a zero balance account is free of these requirements. As the name says, you can open and maintain zero balance accounts without making any deposits ever. Banks like Kotak Mahindra Bank even allow online free account opening.
Safety and Growth of Money:
Zero balance accounts guarantee the safety and growth of your money. Some of these accounts come with the backing of the Reserve Bank of India and the Government of India. Even banks keep an eye on these accounts for safety. Also, zero balance accounts attract interest on deposits, allowing you to grow money over time. Since interest rates vary from one bank to another, you are better off choosing your bank wisely. For instance, if you bank with Kotak 811, expect the best interest rates (up to 4% per year) alongside many perks.
Easy to Open:
Opening a zero-balance savings account is as easy as it gets. The documentation requirements are minimal. Just furnish self-attested photographs, identity, and address proofs, and you’re sorted. Banks like Kotak Mahindra Bank even allow e-KYC. Choose a suitable time, and the bank will complete the verification online. Also, a zero balance account is openable online as well as offline. If you find visiting your nearest bank branch a hassle, pick up your phone, download the bank’s app, and follow the instructions. You can open a zero-balance account and use it right away.
Move Money, Your Way:
The best thing about a zero-balance account is its ease of moving money. Since the account typically supports mobile and Internet banking, you can easily transfer funds online. The account can be used to make transactions via NEFT, IMPS, UPI, Scan & Pay, and other methods. You can visit your nearest bank branch or ATM or issue cheques for withdrawals. Usually, banks provide credit card facilities to eligible zero-balance account holders. You can even pay tuition fees and make other monthly reoccurring payments automatically through Kotak 811 zero-balance account with an e-mandate facility.