Tuesday, June 29, 2010

Optimize your SB accounts.

Today we are wooed everyday by banks to open up SB accounts with them. They come with fancy names and titles- Preferred, kids accounts, Priveledge etc etc.

All that the sales person wants is to have a banking relationship with you with THEIR branch. I mean ,just near my house there are two HDFC branches... one if i take a left turn , one if i take a right turn :) both within 1.5Kms

Each of them want to do business with me and my family- it is critical for their survival.

But at what point do we say that we have enough bank accounts and we dont need more?

This post is some thoughts around that.

1. we definately need one SB account as a permanent account. This should be used and kept for your demat accounts, SIPs, all the stuff that one doesnt want to change if one moves jobs, houses, cities etc .
This bank account should be with a bank which has an national reach with online facilities such as netbanking and a good customer service.  Remember if you transfer your bank account when you move cities - like what our dad's used to do-- one will need to change all the documentation with our MFs and other products. Hence the reach of the bank and the services that the bank offers becomes extremely critical
If your present bank doesnt have these features- take the effort to shift to a new bank and get it done now.

2. Salary account. - Yes this one keeps changing , especially with the newer generation , since they keep shifting jobs every two years. And while i did read in Outlook money that we should negotiate with employers to give a cheque- i think it is prehistoric- and most of the employers will totally disagree. I mean why should they add more work to themselves.
So get a salary account preferably if you had a previous salary account with a branch that is closer to your home, so that you can make use of other services like lockers etc.

3. Spouses account: yes it is always better to have a separate account with your wife/ husband for tax and investment purposes. This is to not say that you should not have a joint account- Definately do - but have one separately also.

4. Joint account with Spouse. Especially for the regular spending activities or pooling of money for household expenses.

Beyond the above 4 accounts-- i dont think we need to have an account anywhere else. I mean just imagine that if one has 7-8 accounts how hard it is to manage the money and all the paperwork

Sometime i have said that we should also look at FD in different banks-- but then we dont necessarily need to open an account to have an FD... but if a bank consistently has something good to offer we can have1 more :)

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