Zero balance accounts: the hidden costs to check

What zero balance means

It means the bank does not require you to maintain a minimum balance, so you cannot be fined for a low balance. Many banks offer it as a regular savings account variant, and there is also a regulated basic savings account for people who want a no-frills account with no minimum balance.

Under the rules for basic savings accounts, the bank must provide a set of essential services, including a limited number of free withdrawals each month. The details, and whether the bank's ordinary zero-balance accounts match them, can differ, so read the terms of the specific account.

Charges to check

• Debit card: some accounts charge an annual fee for the card or for a replacement, while others include a basic card free.
• Free transactions and withdrawals: there is often a cap on the number of free ATM withdrawals or cash transactions each month, with a fee for each one after that.
• ATM usage at other banks: the regulator specifies a number of free monthly transactions at other banks' ATMs, and charges beyond that. Check the current limit, which has changed over time.
• SMS alerts, cheque books and statements, which may be free or charged.
• Cash deposit limits, and fees for depositing cash beyond them.
• Charges for services such as demand drafts, NEFT or IMPS, which may be free digitally but cost more at the branch.

What you might give up

Zero-balance accounts often pay the standard savings rate, and they may lack the extras that come with higher-balance accounts, such as a premium debit card, lounge access, insurance cover or relationship benefits. That is a fair trade for many people, as long as you know you are making it.

Some zero-balance accounts are also digital-only, with limited branch service. That is fine if you bank online, but worth knowing if you occasionally need to visit a branch.

How to choose

Compare the account on the basis of what you will actually do with it: how often you withdraw cash, whether you rely on ATMs of other banks, and whether you need a debit card. Choose the account whose free limits match your habits. An account with a few small fees you never trigger is cheaper than one with fewer fees that you hit every month.

This is general information, not personal financial advice. Bank charges change, so read the current schedule of charges before you open.