Don’t be fooled by Women’s Day offers on savings bank accounts, look before you leap

Although we all need bank accounts- men or women- women’s day is generally an occasion where some banks hawk bank accounts that are targeted towards women, specifically. Banks such as HDFC bank, Kotak Mahindra bank, ICICI bank, RBL Bank, etc. are offering specially designed savings account that offers several benefits aimed at women.

Typically, these accounts are offered on women’s day, so there’s a good chance that women bank customers might be offered these accounts today. Several offers come bundled with a women’s saving bank account in the form of shopping discounts and such added benefits. But do you really need them? Let’s take a look on what’s on offer.

Why a separate women savings account?

Typically, a women’s saving bank starts by offering a lower minimum balance requirement as compared to a regular savings account. For example, minimum balance of women’s savings account at RBL bank is Rs 10,000 against Rs 25,000 in regular savings bank account.

The women savings account can usually be opened either individually or jointly as a primary account holder, so there is not much difference here.

Some of the other benefits that come with women saving accounts are doorstep banking services, insurance covers like critical illness and/or personal accident covers, an additional kids’ account, discount/cash back offers for shopping through credit cards specially designed for women customers, etc.

For instance, with ICICI Bank’s women advantage savings account, you are eligible for iProtect smart life cover which provides protection against accidental death and 34 critical illnesses.

IDBI bank is offering a zero balance children’s account with a women’s account, if required. Similarly, the debit and credit cards associated with the women savings account allow users to avail exclusive discounts and offers on products from select merchant partners including restaurants, jewelers and departmental stores.

Note that these women-specific credit cards are not available to women customers if they are second-holders to someone else’s savings bank account, such as their spouse or their children.

In addition, some of the banks offer discount on processing fees (25% to 50%) while applying for two-wheeler loans and discount of 10% to 15% on lockers’ rent in the first year, etc.

Women savings account_table

No Free Lunches

The features come at a cost. For instance, in iProtect smart life cover with ICICI Bank’s women advantage savings account you are eligible to get a life insurance cover as well as critical illness cover for a sum assured of Rs 4 lakh at a monthly premium of Rs 200. Note that the sum assured here is fixed at Rs 4 lakh for women aged 21 to 35 and Rs 3 lakh for women aged 36 to 50 years.

A life cover and critical illness cover of just Rs 4 lakh is generally too less for women- or any individual- aged below 30, especially since at that age you could in fact buy a higher cover with, of course, more premium. A life cover should be at least ten times of annual income.

Financial advisors always recommend keeping insurance and investments separate. It’s not recommended to opt for insurance cover just because you are getting an insurance benefit with your savings account at discounted premium as bank claims.

Bhakti Rasal, Mumbai-based Certified Financial Planner cautioned, “There are chances of discontinuation from the insurance company at the renewal stage or rating up of the premiums as per the renewed group insurance contract between the banker and an insurance company.”

Financial experts recommend buying insurance policies as per your needs and not buy it as a bundled product.

Further, the account holder also needs to maintain monthly minimum balance in savings account which varies from bank to bank. On an average, the monthly minimum balance for women’s savings bank account required is Rs 10,000 to Rs 25,000. There are banks which ask to maintain a fixed deposit with the women savings account. For instance, at IndusInd bank women customers of savings account need to maintain Rs 5 lakh in fixed deposit at all times.

Banks are even offering attractive discounts / cash back offers for shopping to women account holders from merchants associated with the bank. Such discounts often entice customers to shop impulsively rather than when there’s a genuine need.

Sapna Tiwari, Co-Founder and COO, Rupeewiz Investment Advisors said, “Often such consumers end up in equated monthly installments (EMI) trap by using their credit cards from women savings account and pay interest cost of 30% to 45% per annum (it varies with the bank).” You may even end up using your debit card which also has attractive discounts and utilize savings in shopping instead of investing for future goals.

What you should do?Though women’s saving bank accounts come with added benefits that may not accrue to women if they are second holders to their spouses’ or children or someone else’s bank account, more often than not these benefits don’t add value. For instance, standalone insurance cover works better as you can customize to your needs.

Locking away your money in a fixed deposit when you may not need one, may skew your asset allocation and lock your money away.

If you already have a zero salaried account from your employer with similar benefits, you may not need another separate account. Since, it will be additional cost to maintain monthly minimum balance in savings account. And beware of the EMI trap as Tiwari explained above.

Too many discounts and offers also come with the fineprint, which you should be prepared to go through minutely, if these discounts and add-ons attract you.

For the majority though, we suggest you avoid women specific bank accounts. Stick to plain-vanilla bank accounts and opt for separate insurance cover and credit cards that suit your needs.