As India continues to move closer to the goal of complete digitization and increasing financial inclusion, many people, especially those who live in urban areas and metropolitan areas, have begun to have more than one savings account for a variety of reasons. While many people register a new bank account when they start a new job or to meet their various financial objectives, others open numerous savings accounts to take advantage of a wide array of account features, customer service, etc.
Having numerous savings accounts comes with its own set of pros and cons. Having a look at them will assist you in determining whether or not you require several savings accounts. In addition, it’s critical to understand the importance of having a decent pan card cibil score and how it can affect your financial health in a variety of ways, besides the obvious aspect of how you manage your bank accounts.
What are the advantages of having multiple savings accounts?
Bigger daily ATM withdrawal limit– Because all savings accounts have a daily ATM withdrawal restriction, having numerous savings accounts can increase your overall daily withdrawal limit by a significant amount. As a result, having numerous savings accounts allows you to disperse your bank balance over multiple accounts while still withdrawing additional funds from ATMs as and when you need them. Inculcating healthy financial habits, such as understanding how to increase cibil score, checking one’s credit report, using the facility of pan card cibil score, and taking steps to build or enhance it, can be beneficial especially when one is managing many bank accounts at the same time.
A larger number of free ATM withdrawals: Most savings accounts have a monthly restriction on the number of free ATM withdrawals that can be made, beyond which a fee per transaction is paid. The number of free ATM transactions accessible to you increases as the number of savings accounts you have grows. As a result, if you often withdraw money from ATMs, having multiple savings accounts will allow you to take advantage of more free withdrawals each month.
Spread accounts and costs- Those who know how to increase cibil score also know that there are not one but four credit bureaus available to check reports and scores.
Similarly, when you have multiple savings accounts, you can distribute transactions among the accounts and reduce your overall banking costs by not exceeding the transaction limit above which a fee is charged. Holding multiple savings accounts also allows you to spread out your transactions among several accounts and reduce your overall banking costs.
Chance to segregate accounts based on financial objectives- There is no doubting the fact that having a good pan card cibil score is essential for achieving good financial health and, consequently, achieving life’s financial objectives. In addition, understanding the significance of monthly practice to verify one’s cibil score is beneficial in this regard.
Another method of wisely saving for diverse financial goals, especially for those who know how to increase cibil score, is to maintain multiple savings accounts, each of which is marked with a certain goal, which may be short term or even long term in nature, as described above. Having only one savings account makes it tough to save, and you may wind up depleting your savings account’s funds and therefore failing to fulfil your financial goals on time.
Acts as a backup plan in the event of an income disruption- The banking business is frequently disrupted by labour strikes, technical malfunctions, or any other type of disruption that leads to the non-functioning of numerous accounts or the interruption of some other service. Holding numerous savings accounts will allow you to complete a transaction in the event that your primary account is momentarily unable to supply you with that service.
Offers on different debit cards-Cash back, discounts, and reward points are just a few of the incentives available on debit cards these days, according to the Federal Reserve. Being able to make online transactions and point of sale (POS) transactions on the basis of the best deal available among your cards is made possible by having various savings accounts. However, do not mistake the role of debit cards for the role of credit cards when it comes to credit score computation and understanding how to increase cibil score. When considering how to check your pan card cibil score, keep in mind that only credit cards and loans are considered in the calculation; debit cards, on the other hand, are not considered to be a type of credit.
What is it that works against them?
Lower interest rates
Fixed deposit interest rates are typically around 5.5 percent, with some small finance banks offering higher rates of up to 6 percent -7 percent. Savings accounts, on the other hand, are typically offered at interest rates between 2.5 and 4 percent (although some small finance banks offer higher rates of up to 6 percent -7 percent as well).
So, having many savings accounts will result in lower interest earnings than having multiple fixed deposit accounts or debt mutual fund investments. Savings accounts would also be subject to charges and fees, such as non-maintenance of average monthly balance, yearly card charges, and so on, which would not be applicable in the case of FDs and debt mutual funds, among other things.
Aside from reduced interest rates, which can impair your financial health by preventing you from building money, another major factor that can harm your credit health is being unaware of what constitutes a high pan card cibil score. No matter how much money you make or whether you need a loan or credit card right now or in the near future, it’s critical to establish and maintain a solid credit score and to understand all of the factors that influence it in the process of how to increase cibil score.
Time-consuming to keep track of many accounts
Having various savings accounts means you will have to keep track of multiple debit card pins, net-banking usernames and passwords, cheque books, minimum monthly average amounts, and so on. Failure to comply with this requirement may result in financial difficulties for the individual, particularly if they are not financially disciplined and also lack knowledge or are careless in their grasp of the value of a good credit score and the role it plays in your financial life.