Did you know that banks charge different rates of interest on current accounts based on how much money you keep in it? If you don’t have any balance, most banks will give you a zero-balance account, which is also called a no-frills or low-cost current account. In this article, we explain what a zero balance current account is and how you can open one online.
What is a Zero Balance Current Account?
A zero balance current account is a basic bank account that does not require you to maintain a minimum balance. People who do not have sufficient funds to earn interest on their savings, students, or people with irregular income are the perfect candidates for a zero balance current account.
A zero balance current account can also be called a no-frills or low-cost current account. A current account is a type of bank account that individuals and businesses use to store and manage their money. People use current accounts to pay bills, receive income, and access their money via ATMs. Current accounts include features like unlimited withdrawals, bill payment, and check writing.
A current account requires a regular income because there is no minimum balance requirement. However, its features are lower than that of a savings account, which requires a deposit of Rs. 5000. The low minimum balance and fewer account features make current accounts a cheaper option for those who will not use a lot of the account’s services.
Zero balance current account benefits
Here are some of the benefits of a zero balance current account:
1. No minimum balance
You don’t have to maintain a minimum balance in your zero balance current account. This account is more suitable for people who don’t have a regular source of income and who don’t plan on using the account often.
2. Higher rates of interest
You may earn interest on your money if you have a regular savings account. People who maintain a zero balance current account will not earn interest. Since you don’t have a balance, the bank does not have to worry about loaning your money and turning a profit from the interest rate.
3. More flexibility on account features
In a regular current account, the bank usually provides you with a debit card. You can use the card to make ATM withdrawals or purchases online or in-store. If you have a zero balance current account, banks usually don’t issue debit cards. You can still make online or in-store purchases, but you will have to write a check.
4. Lower service charges
Some banks charge a monthly fee for maintaining a current account. If you don’t have a balance, you will not have to pay any fees.
How to open a zero balance current account online?
Here are the steps to open a zero balance current account online:
- Decide which bank you want to open your account with. Do your research and choose the one that best fits your needs. Open an account with the bank. You will probably have to visit the branch in person since banks don’t usually offer this service online.
- Once you receive your account number and PIN, you can manage your bank account online.
- Open an online account, and follow the steps to open a new current account.
- Once you complete the online form, you may receive a call or an email regarding your application. If your application is approved, you can use your new account immediately.
Things to remember before opening a zero balance current account
Before you open a zero balance current account, keep the following things in mind:
- Use your zero balance current account sparingly – Although banks don’t charge you for maintaining a zero balance on your account, you will have to pay a fee if you exceed your withdrawal limits.
- Don’t apply for more than one zero balance current account – Banks will wonder why you’re applying for so many if you have no income.
- Use a different email address for each account – Banks will ask you to verify your identity when you apply for a new current account. Make it easier on yourself by using a unique email address for each account.
- Consider the zero balance account alternatives – There are other low-cost accounts available if you don’t like the terms of a zero balance account.
- Take advantage of your bank’s online services – Managing your account online can be easier than managing it in person.
Disadvantages of opening a zero balance current account
Banks charge higher interest rates on savings accounts because people who have money in those accounts usually want to earn interest on it. People with a zero balance current account won’t earn any interest, so the bank doesn’t have to worry about loaning money and turning a profit from it.
- You won’t earn interest – You won’t earn interest on your money if you don’t have a balance. You won’t make any money from investing it, either.
- You can’t write cheques – People who have a zero balance current account don’t have chequebooks. This is because the bank doesn’t want you using too many of their cheques too often.
- Your bank may charge you a fee – Some banks charge a monthly fee for maintaining a zero balance current account.
- You can’t transfer money between accounts – If you have more than one account with the same bank, you can transfer money between them and pay bills using the internet or telephone.
Alternatives to a zero-balance current account
There are several alternatives to a zero balance current account. Here are some of them: – Savings account – A savings account is similar to a zero balance current account. It doesn’t require you to maintain a minimum balance.
Regular current account – A regular current account requires you to maintain a minimum balance. It may charge a lower rate of interest than a savings account.
Credit card – You can open a credit card account and use it to build credit and earn rewards.
A zero balance current account is a low-cost account that requires very little money on your part. It doesn’t require you to maintain a minimum balance and doesn’t offer any interest on your money. It’s a perfect account for students who receive regular income or people who have irregular incomes and don’t have the funds to maintain a minimum balance.
The benefits and attributes of a zero balance current account make it ideal for all businesses and companies who wish to engage in hassle-free transactions. However, one should be mindful of the features offered by a zero balance current account before opting for one.