Breaking Down the Key Differences Between Zero Balance and Normal Accounts

If you are planning to open a new bank account, you may be wondering about the differences between a zero balance account and a normal account. Both these accounts have distinct features and advantages. But before you make a choice between zero balance account vs. a normal account. , you need to first understand what these accounts are and how they are different.

So, without any delay, let’s dive right in.

What is a normal savings bank account? 

A savings bank account is a deposit account that you open with a bank. You can add your funds to this account in order to save money. Banks offer interest on the balance in the savings account at a modest rate of interest. The interest rate is lower than the rates at which FD interest is offered, but nevertheless, you can earn some returns on your savings account balance.

Another distinct feature of regular savings bank accounts is that banks typically have a minimum balance requirement. In other words, you will be required to maintain a minimum sum in your account at all times. If your balance falls below this limit, the bank will levy a penalty for non-maintenance of the minimum balance.

This minimum balance requirement varies from one bank to another. In most banks, it is in the range of ₹5,000 or ₹10,000. However, for many premium bank accounts, the minimum balance can be ₹25,000 or higher.

What is a zero balance account? 

A zero balance account is also a kind of savings bank account. But, as the name indicates, there is no minimum balance requirement for these accounts. So, if you open a zero balance account with a bank, you need not worry about maintaining a specific sum in your account at all times.

Apart from this key distinction, a zero balance account shares many features with a regular savings account. Some common benefits and features of these two types of savings accounts are listed below.

1. Interest on the account balance 

Both these types of accounts offer interest on the account balance. So, if your zero balance account vs normal account dilemma revolves around earning interest on your savings, both options go toe-to-toe.

2. Debit card facility 

You can get a debit card irrespective of the type of account you choose — whether it is a regular savings bank account or a zero balance account. This makes it easier for you to transact online and withdraw cash at ATMs.

3. Mobile and internet banking 

Whether you choose to open a zero balance account or a regular savings bank account, you will get to enjoy digital facilities like mobile banking and internet banking. These facilities make it easier to bank remotely or on the go.

Zero balance account vs normal account: What are the differences? 

You’ve seen how these two types of savings accounts are similar. But to make an informed choice in the zero balance account vs normal account comparison, you must understand how the differences between a normal account and a zero balance account. So, let’s take a closer look at the key differences.

‍ 1. Minimum balance requirements 

The primary point of difference between these two kinds of savings accounts is the minimum balance requirement, of course. In a regular savings account, you will have to maintain the minimum sum needed. However, if you opt for a zero balance account, you can have a nil balance without facing any repercussions.

‍ 2. Limit on the number of account openings 

When it comes to a regular savings account, there is no limit on the number of accounts you can open with the different banks in the country. However, in the case of zero balance accounts, each individual can only have one such account, as per the regulatory authority. So, if you already have a zero balance account, you cannot open another without first closing the old one.

‍ 3. Foreign remittances 

If you have a regular savings bank account, you can carry out foreign transactions using the funds lying in the said account. There will, of course, be foreign transaction charges levied as per your bank’s terms and conditions. However, if you have a zero balance savings account, no foreign remittances can be made.

Zero balance account vs normal account: Which one should you choose? 

Knowing the similarities and the differences between a zero balance account and a normal account can help you make a choice more easily. The bottom line can be summed up as follows.

Choose a zero balance account if you want to earn interest on your savings without the hassle of maintaining a minimum balance in the account. On the other hand, if you already have a zero balance account, then your only choice is to opt for a regular savings account in case you’re planning to open a bank account soon.

Conclusion 

This should help you settle the zero balance account vs normal account debate. As you can see, each kind of bank account has its own features and advantages. Based on what’s best for you, you can choose a suitable kind of bank account.

‍ Frequently Asked Questions 

‍ 1. Is a zero balance savings account good? 

Yes, opening a zero balance savings account is always a good idea. This is because with this kind of an account, you need not worry about having to maintain a minimum balance Even if you have nil balance, you will not have to pay any extra fees or penalties. Also, none of the facilities that your zero balance account offers will be suspended even if you do not maintain a minimum balance in the account.

2.What are the disadvantages of zero balance account?

In some cases, NRIs can't have zero-balance account and sometimes even foreign contribution isn;t allowed for zero-balance accounts. This of course, depends on the bak you choose. If you are looking to make money from interest on a zero-balance account, know that the interest rates can be average or less than it and it isn't the best idea to use it as an income tool.

3. What is the benefit of zero balance account?

Zero-balance accounts don't require you to maintain a balance. This can give you great flexibility to move your money around at any time in the month.

4. What is the normal interest rate on a savings account?

In general, banks set interest rates on their savings account and these usually vary from 2.50% p.a. to 7% p.a. depending on the amount of savings.

5. What are the disadvantages of zero balance account?

• Only Indians can open a zero-balance account.
• Certain online zero balance accounts have an initial balance limit of ₹1 lakh. These restrictions can be removed after the completion of the KYC process.
• Foreign contributions cannot be made to zero balance accounts.

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Want to know more? Read on!

1. How to open a zero-balance savings account online 

2. What is the procedure for opening a digital zero-balance account