The savings bank account is a place where most of us leave a lot of balance. This is more by habit and inaction rather than any design. Traditionally all banks paid interest on the MINIMUM balance – by some stupid definition – of balance between 10th and 30th. It was difficult to calculate the correct interest, but since the rate was quite low, it did not matter.
Now that the interest rates are market driven will we change our bank account?
To me the answer is NO. A capital no. Because once you are with a bank all your financial transactions are tied to that account. So you will end up being held by the bank with at least 8-10 tentacles. I was going through my savings bank account and I found most of the transactions are automatically going to the bank account. I have about 100 credits annually apart from dividends COMING AS A DIRECT CREDIT.
In fact my banker told me, half in jest, ‘try changing the bank account’ – I CANNOT.
So if Kotak bank was to offer me 6% p.a. interest, how does it matter to me – I am too damn lazy to make changes (and I agree with the banker too – opening an account is too damn painful).
So what is the choice? Just transfer say Rs. 500,000 to a sb a/c with Kotak Bank and collect a higher interest. My main bank is unlikely to increase interest rates – but I will live with that.
I think if there is a sensible bank offering a nice rate, open an account and leave enough balance ….anyway if you are leaving Rs. 1 million in your bank – you might as well leave Rs. 300,000 in 3 bank accounts and earn a higher interest!
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