Bank accounts and UPI

A bank account is the first financial product most people own and the one they think about least. Yet the type of account you hold, the balance you keep in it, and a form you may have skipped on the day you opened it decide whether you lose money to charges, and whether your family can reach the money if something happens to you.

Savings, salary and current accounts

Most people need only a savings account, and perhaps a second one to park the emergency fund away from daily spending. If your employer opens a salary account, it is a savings account with the minimum-balance condition waived. When you change jobs, either ask the new employer to pay into it or close it before the bank starts charging. And charging is easy to miss: banks charge a penalty when your average monthly balanceAverage monthly balanceThe sum of your closing balance on each day of the month divided by the number of days; this is what the minimum-balance rule is tested against. drops below the minimum. The penalty is deducted automatically, and on a small balance it can quietly take more than the interest you earn. Also watch for charges on cheque books, SMS alerts, debit card annual fees and cash withdrawals beyond the free limit. The schedule of charges is on every bank's website; read it once a year.

UPI: the account in your pocket

UPI links your bank account to a phone number and a UPI ID. A payment moves money from your account to the shop's in seconds, with no charge to you. The same speed works for a scammer, so three habits matter.

• You enter your UPI PIN only to pay. You never need a PIN to receive money. Anyone who says otherwise is running a scam.
• Never share the PIN, the OTP or your screen with a caller, even one who claims to be from the bank or a delivery company.
• Treat every "collect request" from an unknown name as a trap; decline it. Check the receiver's name on screen before you confirm a payment.

Two protections: nomination and DICGC

A nomination names the person the bank will hand the money to if you die. It is the form most people skip. Without one, your family must produce a succession or legal-heir certificate, a process that can take months and cost money. Adding a nomineeNomineeThe person the bank pays the balance to on your death, so your family does not need a court certificate. takes one form, online or at the branch, and can be changed at any time. Check every account, FD and locker, name a nominee for each, and tell that person.

The second protection covers the bank itself failing. Deposits in every bank licensed by RBI, including cooperative banks, are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGCDICGCDeposit Insurance and Credit Guarantee Corporation, an RBI subsidiary that insures bank deposits up to ₹5 lakh per depositor per bank.) up to ₹5 lakh per depositor per bank. That covers principal plus interest across savings, current, FD and RD held in the same bank in the same capacity. If you hold more than ₹5 lakh in one bank, spreading it across two or three banks keeps every rupee covered. A joint account, or an account you hold in a different capacity such as a partner in a firm, is counted separately.