• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

G. Madhan

TIRED of savings accounts that offeryou only a small return? Maybe it is time to check out some of the special savings accounts now available. For instance, Smartsave Gold from Global Trust Bank.

This savings account competes directly with similar offerings, such as Orange Account from ING Vysya Bank, and indirectly with all other savings accounts.

Features

In Smartsave, the savings account is linked to a term-deposit account. For amounts held in the savings account, the bank pays an interest of 3.5 per cent per annum. However, the amount held as term deposit attracts higher rates than most other deposits, at 6 per cent for 1-3-year deposits and 6.25 per cent for deposits over three years.

The account also provides an auto-sweep facility, which enables you to put aside a sum (flexible unit deposits in multiples of Rs 5,000) to obtain higher returns, whenever the balance in the savings account exceeds a set limit. Few banks — ICICI Bank, for instance — offer this facility.

The account also comes with an auto reverse sweep facility, that is, if the balance amount in the savings account is not sufficient to automatically pre-close only the required amount (in units of Rs 1,000) in the flexible unit deposit and credit it to the savings account.

The savings account, in addition to features such as international debit card and Internet and mobile banking facility, offers the following:

You can withdraw up to Rs 50,000 in a day through the ATM card. In ING-Vysya and HDFC Bank, for instance, the limit is lower. You can also make purchases of up to Rs 50,000 in a day in merchant establishments using the debit card.

The account provides a 50 per cent concession on your demat account's annual maintenance charges.

The account also provides locker facility that does not require a separate security deposit. However, the bank levies on annual fee on use of the locker ( between Rs 500 and Rs 1,200).

Any number of demand drafts can be taken without a charge. The bank also provides you cheque protection facility up to Rs 10,000.

The account also comes with a free annual subscription of a financial magazine (Outlook Money).

However, you need to maintain a minimum average quarterly balance of Rs 20,000 in your savings account or a minimum average quarterly balance of Rs 1 lakh in your term deposit account. The requirement is higher given that most of the special savings account has a lower minimum balance requirement. For instance, HDFC Bank's `Freedom Savings Account' requires the account holder to have a minimum average balance of Rs 1,000. Also note that:

The bank levies a charge of Rs 500 per quarter if the minimum average quarterly balance falls below the required limit.

The allotment of locker is subjected to the availability.

Recommendation

The product is suitable for those who prefer higher returns and better liquidity. But if you are looking for a no-frills bank account, the savings accounts of public sector banks offer a better deal, as they stipulate only a nominal minimum balance.

Even as special savings accounts go, the minimum balances stipulated by this account may be a deterring factor for those who do not normally retain large cash balances.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Investment Quiz

Copyright © 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line