State Bank of India in partnership with tour operator Thomas Cook is offering a savings plan, SBI Holiday Savings Account, for holiday goers. The SBI Holiday Savings Account functions in the form of a recurring deposit (RD) account with the bank, and enables the subscriber to avail a vacation package offer listed under the 'Holiday Savings Account' packages on the Thomas Cook website, according to State Bank of India's website - www.sbi.co.in. Savings in the SBI Holiday Savings Account earn interest at the prevailing interest rates for a recurring deposit of 12-month maturity. Currently, SBI pays interest at the rate of 6.80 per cent on recurring deposits of 1-2 years, according to the bank's website. (Also Read: SBI Accounts: Fixed Deposit (FD) Compared To Recurring Deposit (RD))
How SBI Holiday Savings Account works
SBI has listed out the following steps for a user to apply for a Holiday Savings Account:
- The user is required to visit the Thomas Cook HSA website and select a package of his/her choice from a variety of domestic and international holiday packages offered by Thomas Cook, according to the SBI website. (Also Read: What SBI Average Monthly Balance Guidelines Mean For Your Savings Account)
- The cost of the chosen package is then divided by 13. After this step, the user is redirected to SBI's internet banking portal, onlineSBI.com, where he/she can set up an e-recurring deposit (e-RD) account for 12 months.
- At the end of 12 months, the maturity proceeds are e transferred to Thomas Cook, which pays for the pre-selected holiday package, according to the SBI corporate website.
- Thomas Cook funds the balance amount (13th instalment) to purchase the selected package after factoring in the accrued e-RD interest, according to the SBI website. (Also Read: SBI Minimum Balance Rules, Penalty Charges For Non-Compliance Explained)
Other key details about the SBI Holiday Savings Account
Premature closure: In case the recurring deposit account is closed prematurely, the proceeds are be credited to the account from which the account was initially funded.
Penalty: Penalty charges are applicable in case of premature closure of the e-RD account. Penalty in case of delayed payment of EMI is Rs 1.50 for every Rs 100.
Maturity period: On maturity of the e-RD account, the maturity instruction set for the account is executed and the proceeds transferred to Thomas Cook, unless the customer changes the maturity instruction to be credited to the Savings Account from which the e-RD account was funded, according to the SBI website.
This e-RD account is subject to TDS (tax deducted at source). The TDS is applicable on the Customer Information File (CIF) value, and the amount of TDS applicable cannot be ascertained beforehand, according to SBI.