Money Saver India
Quit your job? Is your savings a/c worth it?

Quit your job? Is your savings a/c worth it?

If you think you’ll have your zero-balance account forever, this won’t cheer you up. You lose all the benefits, including the free debit card and dedicated relationship manager, in three months.

The salary account is no small luxury. You can withdraw without any fear of going below the minimum balance, you’re accorded privilege status at your bank, which means you don’t have to wait in the queue, and many facilities, including your debit card, would be free. Not to mention that if your salary account would most probably be at a leading private bank.

But remember that you can enjoy their plush branches, if not efficient service too, only because of your employer’s relationship with the bank. So when you say bye-bye to your company, also bid farewell to the perks at your bank. You’re given three months to adjust to the shift, but after this period, your account becomes the regular savings account the bank has to offer. Your bank may not inform you of the change, but it will be done. This means that you will have to maintain a minimum balance, you will be charged for your debit card and, perhaps worst of all, you will have to wait your turn at the branch.

Is it worth it?
Normally, the account to which your salary is credited is the most used. This will change when you quit your job, unless your new employer also has a tie-up with the same bank. If this is the case, you should pay some attention to how you will handle the change. Here’s what you need to think about:

Consider the costs If the only accounts you have besides your salary account is at a public sector bank, you should keep in mind that minimum balances are usually Rs10,000, not Rs1,000. Your debit card would also become chargeable. If you’re not going to have much money in the account, which means you’re not going to be using the debit card much, why even pay the Rs200 to Rs500 private banks charge annually?

Get used to being a regular Many private banks give large organisations privilege accounts. When you quit, this privilege is stripped. This means that you’ll have to wait in queue, you won’t have a dedicated relationship manager you can call or have a bank rep visit your home to say, pick up a demand draft. If this is what you want, you’ll have to upgrade to a premium or privilege account yourself.

Maintain the balance You should check if you need to maintain the minimum balance every month or quarter. If your bank needs a minimum monthly average balance (MAB) maintained, you’ll need to be more careful. The penalty is up to Rs500 for non-maintenance. A quarterly average balance (QAB) is easier to maintain, but if you don’t do so, you could be looking at a fine of around Rs750. As it’s an average, a high balance for even a few days could get you off the hook, but don’t wait around too long either. With Citibank, for example, the MAB is calculated on any of the last five days of the month.

Check to see if your bank follows the QAB or the MAB method:

Bank Minimum balance Method Non-maintenance charge
Axis Bank Rs10,000 Quarterly average balance Rs750
ICICI Bank Rs10,000 Monthly average balance Rs250-Rs350
HDFC Bank Rs10,000 Monthly average balance Rs250-Rs350
Indus Ind Bank Rs10,000 Monthly average balance Rs250-Rs350
HSBC Rs25,000 Monthly average balance Rs350

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