Are you looking to maximize the returns on your savings? Online savings accounts by fintech banks and NBFCs offer more attractive interest rates than traditional ones. But are they the best pick for your specific needs?
While the higher returns are tempting, online savings accounts also have some tradeoffs that one must evaluate before opening an account.
Let’s examine critical parameters to help you make an informed call.
Factors to Consider While Choosing an Online Savings Account
As you look to open a savings account online, keep these essential things in mind to find the one that fits your money objectives best:
1. Interest Rates Offered
The biggest allure of online savings accounts is the interest rates—often 50-100 basis points higher than traditional banks.
This difference can add up substantially over time for large deposit balances. However, consider any minimum balance requirements and caps imposed on interest calculation. Moreover, traditional banks tend to offer higher stability rates than fintech entities.
2. Ease of Operations
Online accounts can be opened digitally in under 5 minutes without visiting a branch. All transactions are facilitated seamlessly via mobile apps and websites, which is convenient, especially for tech-savvy individuals juggling busy schedules.
With Online saving account opening, you can manage your finances effortlessly from the comfort of your home. However, those who prefer in-person interactions may find the absence of physical branches limiting. While customer care channels are available, resolving complex queries could need more effort.
3. Safety of Funds
Under RBI regulations, online entities provide similar deposit insurance coverage up to ₹5 lakh. So, your money remains equally safe.
However, traditional banks offer more trust in money matters for some, given their long-standing reputations. This provides additional reassurance despite regulatory protections in place across both models.
4. Accessibility of Branches
Online savings accounts have no physical branches. While this enables remote digital access from anywhere, the lack of in-person touchpoints can be discomforting for some users.
Traditional banks have extensive branch networks, especially in metro and urban regions. This allows for conducting transactions, seeking assistance and addressing grievances through in-person interactions.
5. Digital Features
Interface, apps and tech capabilities are critical differentiators for online banks. Digital-only platforms tend to offer more advanced features like:
- Instant account opening using Aadhaar and video KYC
- Intuitive mobile apps with graphics-rich analytics and spend categorisation
- Automated investment sweep-ins and withdrawals
- Paperless transactions with e-statements and e-NACH mandates
So, online banks have an edge if you want a fully digital experience with cutting-edge features. Tech-challenged individuals may find traditional banks simpler to navigate.
Tips for Managing Your Online Savings Account
Once you open an online savings account, adopting sound financial hygiene is vital to maximise returns and convenience.
Below are helpful tips:
- Set up standing instructions to automate periodic sweeps from main bank account to online savings to force-build deposits.
- Use auto-save features in mobile apps to instantly stash away small sums when excess balances build up.
- Trigger account opening bonus interest by fulfilling minimum balance commitments in the first 60-90 days
- Monitor interest payouts monthly and sweep out excess balances to link with liquid funds or short-term FDs for better returns.
- Assign joint account access to family members so they can operate the account digitally in emergencies.
- To ensure seamless access, proactively update contact and nominee details if any changes occur.
- Track annual account statements and email/SMS alerts regularly to monitor all transactions in real-time.
Conclusion
Online savings accounts are viable for fully tech-enabled customers who value convenience and a digital experience. However, despite marginally lower returns, traditional bank accounts better serve individuals who still rely on in-person banking or have complex needs.
Analyse your banking habits, tech affinity, income stability, and specific needs to determine if going online is the right fit. This will help you pick an account that optimally meets your banking priorities.
Additionally, exploring easy personal loans can seamlessly complement your online savings account benefits if you require additional funds for emergencies or significant expenses.
