Which Bank has best Zero Balance SB Account?

Choosing an ideal bank for your savings account can always be tricky. So what are the factors you should consider before arriving at a decision? What are the unique benefits you will avail once you select a particular bank? Does your money really grow once you select a particular bank? Well, worry not, let us guide you through some of the important breakthroughs in finance so that you can leverage them to grow your money in a more efficient way.

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Brief history of savings in India

State Bank of India being the oldest of the banks, was first formed in 1806 as Bank of Calcutta. However, Post Office Savings Bank has been the main vehicle for first savings program. So this establishment can be tracked down way back to 123 years. And what is a savings program? What is a savings account? What are the features? How is it much useful? Read below.

What is a Savings Account?

Savings account is a deposit account held in a finance institution. Savings account usually yields consumers moderate interest rates along with principal security. Apart from cash, savings account is considered one of the most liquid investments. Thus, ideal for keeping emergency amount, choose wisely before enrolling to one.

Hard-earned money indeed deserves growth. But choosing a finance institution for the same is a daunting experience. Always keep in mind, high interest yielding account is not the ideal one for every finance planning after all. Every savings account has certain common features. No limits on number of deposits. At present, 4%-6% interest rates. Certain restrictions on withdrawals. Minimum Balance maintenance. E-banking, EMI payments, etc.

How beneficial is a Zero Balance account?

Zero Balance Savings account is a privilege when hard-earned money loses its purchasing power due to inflation. From paying bills to money transfers, zero balance account is a boon to consumers. Here are some of the features you can enjoy with this account:

  • Free from hassles  of maintaining monthly/quarterly balance
  • No charges on money transfers
  • Maintenance charges on Debit card are exempted
  • Encourages investments(know more on our following blog posts)

Savings Account over a Fixed Deposit: Why it is  a better savings instrument?

Now, Fixed deposits are deposit accounts for a fixed period of time. Deposits of a particular amount that cannot be altered. The interest benefits can only be procured after the end of a fixed period (Breaking a fixed deposit lead to hidden fees and penalties that lower net returns).

Usually, savings accounts are in sole purpose of saving a part of income. Whereas, fixed deposits are intended towards lump sum of amounts. Savings account is majorly operated by salaried individuals and small traders.

Fixed deposits are operated by individuals who have surplus/excess or idle money. Savings account offers nominal interest rates. While a very few finance institutions offer zero balance savings account, other benefits include the opportunity to operate with lesser amounts, withdrawals, a passbook, a cheque-book, the number of deposits, transactions, etc.

Ayshwarya syndicate offers a powerful product that can cater money growth effectively. Up to 8% interest rate(per annum), Ayshwarya’s savings account yields interests on daily-basis. This Zero balance account does not press any transactional charges.

Why is daily interest important?

Have you heard about the Magic of Compounding Interest. When Interest is credited more frequently to your account, you earn more interest. And, when your money earns more interest, your balance starts growing faster and bigger. Thus, when interest is added to your account more frequently, you earn interest on original balance, plus the previously earned interest.

A recent reform by RBI states that interest rates are supposed to be calculated on daily basis(The RBI has tried to have all banks credit interest in shorter intervals). Most of the banks still pay-out interests on quarterly basis despite current regulations. Interest credited daily empowers your money to grow faster and gives you access on the day you need it.  
Also be wary of legal terms such as “Annual percentage yield. Quoting the Annual Percentage yield allows banks to include the benefits of compounding within their overall rate of return (effectively allowing them to swallow the beneficial effects of Compounding). We can see this in the below example.

Example 1

Raj Kumar Saves Rs.10,000 in a SB account with HDFP Bank. The bank pays 4% per annum based on the annual percentage yield calculation. Interest is Payable Quarterly. He maintains the same balance throughout the year. Without the application of TDS how much interest would he earn?

Particulars Compounding Interest – QUARTERLY
Interest Rates per annum 4.00%
Principle  ₹      10,000.00
First Quarter Interest  ₹            100.00
Second Quarter Interest  ₹            101.00
Third Quarter Interest  ₹            102.01
Fourth Quarter Interest  ₹            103.03
Value of your saving after a Year  ₹      10,406.04
Total effective interest earned in a year  ₹            406.04
% of effective interest return 4.06%

As you may have noticed his net return is only 4% per annum. Where is the benefit of compound interest? Banks don’t advertise their interest rates. Hence they confuse customers by displaying the “Annual percentage yield” as a result the real rate of interest is only 4%.

How does TDS affect one’s savings?

Tax deductions at Source (TDS) is a medium through which our government collects tax at the very source of income. When applied in interest bearing investments TDS hurt the benefits that compound interest provide. consequently let’s look at this based on the below example

Example 2

Raj Kumar saves Rs.10,000 in an SB account with HDFP Bank. The bank pays 4% per annum based on the annual percentage yield calculation. Interest is Payable Quarterly. He maintains the Rs.100 balance throughout the year. With the the application of TDS how much interest would he earn?

Particulars Compounding    Interest – QUARTERLY TDS NET AMOUNT RECEIVED Compounding Interest-
DAILY
TDS NET AMOUNT RECEIVED
Interest Rates per annum

4.00%

    4.00%    
Principle  ₹      10,000  ₹      10,000.00  ₹      10,000.0  ₹      10,000.00
First Quarter Interest  ₹            100.00  ₹10.00  ₹              90.00  ₹              99.11  ₹                9.91  ₹              89.20
Second Quarter Interest  ₹            101.00  ₹10.10  ₹              90.90  ₹            101.21  ₹              10.12  ₹              91.09
Third Quarter Interest  ₹            102.01  ₹10.20  ₹              91.81  ₹            103.36  ₹              10.34  ₹              93.02
Fourth Quarter Interest  ₹            103.03  ₹10.30  ₹              92.73  ₹            104.40  ₹              10.44  ₹              93.96
Value of your saving after a Year  ₹      10,406.04  ₹40.60  ₹      10,365.44  ₹      10,408.08  ₹              40.81  ₹      10,367.28
Total effective interest earned in a year  ₹            406.04  ₹            365.44  ₹            408.08  ₹            367.28
% of effective interest return 4.06%   3.65% 4.08%   3.67%

Example 3

Prem Kumar, Raj Kumar’s brother, Saves Rs.10,000 in a SB account with ASSCCL. ASSCCL pays 8% per annum interest. Based on the annual percentage yield calculation the rate is 8.33%. Interest is Payable Quarterly. He maintains the Rs.10000 balance throughout the year. No TDS is applicable in ASSCCL SB account. What is his return?

Compounding Interest-
DAILY
TDS NET AMOUNT RECEIVED
8.00%
 ₹      10,000.0  ₹ 10,000.00
 ₹            199.20  ₹                     –  ₹            199.20
 ₹            205.44  ₹                     –  ₹            205.44
 ₹            211.91  ₹                     –  ₹            211.91
 ₹            216.23  ₹                     –  ₹            216.23
 ₹      10,832.78  ₹                     –  ₹      10,832.78
 ₹            832.78  ₹            832.78
8.33%   8.33%

Who and Why Ayshwarya Syndicate?

Ayshwarya Syndicate Souharda Credit Co-operative Ltd. or simply Ayshwarya Syndicate, was established in 2017. Ayshwarya Syndicate believes in building strong partnerships with individuals as well as organisations – with individuals to help grow their wealth by providing access to high return products, and with organisations to help connecting seamlessly to grow their own financial products.

Ayshwarya empowers people to reap their benefits to its fullest potential. Every day interests on savings account just proves that. Importantly, there is no TDS* on your investments(conditions apply).

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By | 2018-04-05T10:41:33+00:00 April 5th, 2018|0 Comments

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