How to choose your savings account in Pakistan!

10th December 2015

 
 

With over thirty banks providing savings solutions in Pakistan, how do you select which savings account is right for you? Which bank provides the product tailored to your financial needs? For this purpose, listed below are five important questions you must seek answers to before finalizing the product for your banking need.

  1. What ideology do you follow when it comes to banking requirements? Although the conventional banking system is dominant in Pakistan, Islamic banking has gained momentum as well and are providing returns at par with the market averages. Several conventional banks are also offering Islamic Banking services to their client base. Gain clarity on the banking segment you wish to invest in to shortlist the bank of your choice.
  2. What amount are you looking to park in your savings account? You can practice two options: either deposit a lump-sum amount into a savings account, or set aside an amount from your monthly pay-check. This is important because specific savings accounts in Pakistan are designed to cater to each respective option. Once you decide upon your mode of savings, it will be easier to shortlist the banks and their savings products.
  3. What is your desired profit rate on the savings account? Most people would classify this as the most critical factor in drafting out their savings plan. A quick sift on the available options would provide you with a clearer picture on the anticipated return on your wealth and assist in eliminating banks whose savings accounts are not generating the desired profit.
  4. What is your preferred mode of profit payouts? Banks offer the facility of monthly, quarterly, semi-annual and annual profit payouts on their savings accounts. This question is significant because it helps in determining your financial need. If you wish to invest in a savings account and live off the monthly return, then a savings account with a monthly profit payout option would suit you. Similarly, you may choose to park your funds and withdraw profits on an annual basis. An important point to note is that profit rates tend to be higher on savings accounts with extended payout periods.
  5. What form of liquidity do you require from your savings account? If you are looking to withdraw regularly from your savings account, or need constant access to your funds, then you would require a product which offers an ATM card and cheque book facility. Likewise, you could park your savings in a fixed deposit or a savings account with minimal withdrawal options to reduce your access. Such options should only be explored if you are not anticipating a dip in your savings in the foreseeable future. Interestingly enough, banks encourage long term savings; they often charge more for withdrawal instruments on a savings account and penalize in the form of reduced profit rates in the event of withdrawals. In retrospect, such accounts provide higher profit rates for your savings.

These questions are tailored to gauge your financial requirement. Before selecting a savings account in Pakistan, it is recommended that you determine the type of account that suits your need. By answering these questions, and conducting a quick market survey on the available solutions, you will be able to shortlist the desired banks and their respective products. Now you may go and get your savings account opened without worrying about profit rates and payout modes. Additionally, it will reduce the hassle of communicating your preferences with your bank representative as your homework on savings accounts would be complete!

 

By Saad Niaz

 

 
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