Savings accounts keep an account holder’s money safe, helping the account holder earn interest on the deposited amount. While banks provide a variety of traditional accounts, one of their key characteristics is the need for a minimum balance. If you want to avoid the inconvenience of maintaining a greater minimum level, choose a Basic Traditional Bank Deposit Account. A better option is opening a zero-balance saving account, specifically designed for zero balance saving account opening. This allows individuals to enjoy the benefits of a savings account without the requirement of a minimum balance.
Understand these accounts and how they differ before deciding between zero-balance and traditional accounts.
What Is a Zero-Balance Account?
It is a type of bank account that has no certain balance requirement. As the name suggests, these accounts do not have a minimum balance requirement. You do not have to worry about always keeping a certain amount in your account if you open a zero-balance account with a bank. A zero-balance account, like a Kotak digital account and a traditional account, has many things in common aside from this important distinction.
What is a Traditional Account?
A traditional account is a general savings account you can open at any bank. A traditional account lets you deposit your money securely with the bank, eliminating the need to keep it at home or carry it. You can withdraw your fund whenever needed, keeping the minimum balance. Traditional accounts have a minimum balance requirement to maintain throughout a month.
You must complete the KYC process to create a traditional account with any bank. Additionally, keep a minimum account balance set by the bank, whether a government or a private bank.
You must also be aware of the distinctions between a traditional account and a zero-balance account to make a well-informed decision before you choose zero-balance saving account opening versus traditional account opening.
Who Can Open the Account?
Anyone can open a zero-balance savings account online if they are a new customer and do not already have a zero-balance account. There is no such rule when you are opening a traditional account.
The Number of Open Accounts Is Restricted
There is no restriction on the number of normal traditional accounts you can open with various national banks. Zero-balance accounts like the Kotak digital account are restricted to a single account per person by the RBI. You can only open a second 0 balance account if you close the first one.
KYC
KYC is necessary in India for many financial transactions. It safeguards each person’s identity and financial/intellectual interests. Opening bank accounts is possible only after the completion of the KYC process. You must enter your Aadhaar Number and the registered mobile number to start a zero-balance online account using Aadhaar OTP. The bank then sends an OTP for verification.
The bank account is good for a whole year. You must complete the KYC process in person or through video by visiting the bank branch, making an appointment through the mobile banking app, or contacting customer service. In contrast, you must deliver copies of the KYC documents to the bank branch to open a traditional account.
Money Sent Abroad
If you have a conventional savings account with a bank, you can use the money in that account to conduct international transactions. The bank levies foreign transaction costs as per its rules and restrictions. The account holder cannot make international remittances if their savings account is zero-balance.
Minimum Required Balances
The minimum balance requirement is, of course, the main distinction between these two categories of savings accounts. The account holder must keep the minimum balance in a standard traditional account. If you choose a zero-balance account, the holder can maintain a 0 balance without suffering consequences.
Conclusion
A zero-balance savings account like a Kotak digital account is popular nowadays because of its many advantages. One can make the most of the account because there is no minimum balance requirement. You can start a no-balance online savings account if you choose the bank.
