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If you are planning to open a new bank account, you may wonder about the different types of accounts available. Understanding the distinctions between zero balance and normal accounts is crucial for making an informed decision. Zero fixed deposit account open typically do not require a minimum balance to be maintained, while normal accounts often have specific balance requirements. In this post, you can look into the key difference between a zero balance account and a normal account.
What is a Normal Savings Bank Account?
A savings bank account is a type of deposit account opened with a bank, allowing you to deposit funds and save money. Banks provide interest on the balance in the savings account at a modest rate. While the interest rate is typically lower than fixed deposit rates, it still enables you to earn returns on your savings account balance. You can easily transfer money through upi app.
What is a Zero Balance Account?
A zero balance account is actually a kind of savings bank account. As the name implies, these accounts have no minimum balance requirement. As a result, if you open a zero balance account with a bank, you are not compelled to keep a set amount in your account at all times. Despite this primary distinction, a zero balance account shares many characteristics with a traditional savings account.
The difference between a Zero Balance Account and a Normal Account
You have seen how the two types of savings accounts are comparable. However, to make an informed decision when comparing a zero balance account to a standard account, you must first grasp the distinctions between the two. Let’s take a deeper look at the main distinctions.
Minimum Balance Requirement: Normal savings accounts mandate maintaining a minimum balance, which can range from ₹5,000 to ₹25,000 or more, with penalties for non-compliance. In contrast, zero bank account open do not require a minimum balance, offering flexibility for individuals with irregular incomes or low-income groups.
Foreign transactions: Funds in a regular savings account can be used for foreign transactions, though with applicable charges. Zero balance accounts do not allow any foreign remittances.
Interest Earnings: Zero balance accounts typically offer lower interest rates than regular savings accounts, which provide higher interest rates but require maintaining a minimum balance. The interest rate on zero balance accounts can vary from 3.50% to 4%.
Limit on account openings: You can open multiple regular savings accounts with different banks. However, RBI regulations limit individuals to only one zero balance account at a time. If you already have a zero balance account, you cannot open another without first closing the existing one.
Capping Words
Knowing the similarities and differences between a zero balance account and a regular account can make your decision easier. Choose a fixed deposit account open online if you want to earn interest on your savings without having to keep a minimum amount. If you already have a zero balance account, your sole option is to open a standard savings account in the event that you want to open a bank account in the near future.
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