Earning interest on a savings bank account could be one of the easiest ways to earn returns. Currently, some lenders offer up to 7% return on savings accounts. The Reserve Bank of India’s (RBI) repo rate hikes have hit borrowers hard, but have also led to higher fixed deposit (FD) and savings account interest rates.
Let’s go back to the advantages of a savings account.
The interest rate applicable on a savings account may vary depending on the type of account, the average balance maintained on the account and the condition set by the bank. For example, the bank may offer a higher interest rate if the balance in a savings account exceeds a certain threshold. Interest is calculated on the progressive balance. Savings account interest rates are generally payable quarterly and there is no maturity period for funds in a savings account.
Here is the interest rate offered by some banks, which in some cases goes up to 7%:
(Caption: Data as on the respective banks’ website as of September 1, 2022; Savings account interest rates for randomly selected public and private banks considered for data compilation; Minimum balance required for savings account and excluding BSBD account.*AMB: Average Monthly Balance; MAB: Average Monthly Balance; MB: Minimum Balance.)
Track interest payments
Before opening a savings account, a person should know when the bank credits interest. Account holders can also track it online or through bank statements. Most banks credit the interest rate earned during a quarter to the customer’s account on the last day of the same quarter.
“Your savings account holds your money securely. It also earns you interest on your deposits. You can deposit your money at private and government banks, cooperative banks, and post offices. Banks regularly send e -emails and newsletters to inform their customers about account benefits and updates.You need to track the interest rate earned on your savings account.It is easy to login to your online banking portals or apps and check the interest credited to your savings account,” said Adhil Shetty, CEO of Bankbazaar.com.
Some banks even offer attractive interest on the savings account balance, which is at par with the average interest rate offered in an FD account.
For security reasons, it should be noted that the Deposit Insurance and Credit Guarantee Corporation (DIGCC) only insures deposits up to Rs 5 lakh (including interest).
Additionally, a savings account with a swipe/Flexi deposit facility can also be a good idea if a person is looking for a higher return on savings account deposits.