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Savings Account

Simple tips to earn higher interest on your Savings Bank Account

Summary: A high-yield savings account can give you an increased rate of interest, along with safety and liquidity of funds.

15 Jun 2024 by Team FinFIRST
Simple tips to earn higher interest on your Savings Bank Account
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A savings bank account provides safety and much-needed liquidity for our funds. It is a very popular low-return option to park your money. However, you can increase the income from your savings bank account deposit by following some simple tips. 

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1. Find a higher rate of interest online.
Not satisfied with the interest offered by traditional savings bank accounts? Many online banking platforms and financial institutions provide a decent rate of interest. If you find a credible bank or financial institution offering a higher interest rate, consider moving your funds there to earn extra interest income. But ensure that the maintenance or other additional charges don’t wipe off any savings you make! Explore online for better returns.

2. Utilize funds effectively.
You can take advantage of the sweep-in and sweep-out facility in your savings bank account to generate higher interest income from your idle funds. Under this facility, your surplus funds are swept out to a fixed deposit income that automatically yields a higher rate of return. You can sweep the money back into your savings account if you need some urgent cash. The bank also does the same when the money in your regular savings account runs low.

3. Interest Rates for Savings Accounts: As per RBI guidelines, the interest rate for savings accounts is uniform across all account types within a bank.

4. Earn indirectly through regular interest credits: Your banker may provide monthly interest credits on your savings bank account. If you maintain a decent balance on your savings account, your monthly interest credit can be used for other investment purposes. For instance, you can open a SIP and deposit the interest income each month. This will ensure that your interest income is used to earn a higher return through actively managed fund schemes.

Interest rates and methods to calculate interest

Key features of savings account interest rates

Compound interest is more beneficial for savings account holders:

Savings accounts use the compound interest rate structure. This interest is based not just on deposited principal but on compounded interest gained in earlier periods as well. Over time, this compounding effect may substantially augment one’s savings yielded by such a saving plan. Compound interest works in favour of account holders. Addition of interest onto the initial amount at intervals leads to an exponential increase in interest. It is especially useful for customers who wish to save for the long-term ensuring that their money works for them.

Characteristics of the interest on savings accounts:
 

For the account holders to reap maximum benefits, it’s important that they understand major aspects of savings account interest rates.

1. Savings account interest rates are variable

Banks offer various types of interest rates which must be watched over by account holders in order to prevent losses with respect to earned returns.

2. Interest Compounding Frequency:

The frequency at which interest is deposited in the account can vary among banks. Some banks deposit interest quarterly, while others may do so monthly. The more frequently interest is deposited, the higher the overall returns for the account holder.3. Savings account interest rates help customers hedge against Inflation

Savings account interest rates play a role in safeguarding funds against inflation. While interest rates provide returns, if they do not outpace inflation, the real value of the money may go down over time. Account holders should consider this to ensure their savings retain their purchasing power.

Frequently Asked Questions

How do you get paid interest on a savings account?

The interest that a customer receives through their savings account is compounded, monthly, or quarterly and customers can earn interest on interest through a savings account. 

How do I get my savings account interest tax?

The income tax department does not tax the interest earned up to ₹10,000 through savings accounts under section 80TTA of the Income Tax Act.

Do banks pay interest monthly?

Banks can credit savings account interest half-yearly, quarterly, or monthly.

Do banks charge for savings accounts?

Banks do charge customers for maintaining certain services of their savings accounts. IDFC FIRST Bank’s ‘zero-fee banking' feature helps customers avoid these charges

Does the account number change when I transfer from my home branch to another branch?

No, the bank account number does not change if you transfer your account to another branch from your home branch. You can continue using debit cards, chequebooks and other bank account services without any hassle or interruption.

*IDFC FIRST Bank offers zero-fee banking on Rs. 10,000 Average Monthly Balance (AMB) Savings Account and higher account variants, subject to maintenance of AMB in the account.

Such services are offered free in good faith, and in the scenario of any abuse, the bank reserves the full right to levy fees according to market standards. All rights reserved.

 Please use the below updated latest disclaimer at all places w.r.t. zero fee banking:

*IDFC FIRST Bank offers zero-fee banking on Savings Accounts, subject to maintenance of required Average Monthly Balance in the account. 

*IDFC FIRST Bank offers zero-fee banking on Savings Accounts, subject to maintenance of required Average Monthly Balance in the account. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.

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