A Savings Account is ideal for everyone worldwide. It provides a safe outlet to collect funds. You can use it to make payments, draw cheques, and invest in other market-linked instruments. It offers a stable income source through salary credits and interest payments. However, the interest rate offered on it has been historically low.
Currently, the Savings Account interest rates are 3% to 4% per annum, depending on the balance slabs from Rs. 50 lakh to less than Rs. 2,000 crore. Even with low-interest rates, there are many ways you can use to maximise your earnings, such as:
- Maintaining an average monthly balance
You are not required to maintain a minimum balance every day of the month. This is especially useful for those who use the Savings Account to make their monthly expenditures, such as bill payments and other utility expenses. Adjusting the amount so that it averages to the minimum monthly balance is enough to avoid penalties from the bank.
- Opening specific Savings Accounts
Banks offer their customers a range of accounts suited to their needs, such as Kids’ Savings Accounts, Senior Citizens’ Savings Accounts, Women’s Savings Accounts, and more. These offer higher interest rates and other benefits, such as ATM withdrawals, Online Banking facilities, chequebook issuance, etc. You can easily open them online or visit the nearest bank branch for assistance.
- Opting for a sweep-in facility
You can opt for the sweep-in facility upon opening a Zero Balance Saving Account online. This is an automatic facility where any amount above a particular limit gets automatically converted to a Fixed Deposit. In case of fund requirements, banks liquidate the Term Deposit to meet the fund requirements. Otherwise, the excess funds earn interest at Fixed Deposit rates. Depending on the standing instructions, the bank will start the sweep-in facility.
It is better to deploy idle funds in FDs and earn at those rates rather than leaving them in the Savings Account.
Importance
Savings Account interest rates offer higher returns on your deposits. While they may seem modest, they are risk-free and act as an additional income source. These aid you in saving money faster, bringing your goals within reach sooner. A special feature is compounding interest, where you earn interest on your savings as well as the interest you have already earned. Over time, this can significantly boost your finances.
A Savings Account is not just a place to park your money. It is a tool for efficiently achieving your financial goals. The interest, especially compounded, can significantly boost your savings over time.
Conclusion
Opening a Bank Account can motivate you to save for your future and become financially independent. Visit the nearest bank branch or download the Internet and Mobile Banking apps on your smartphone, meet the eligibility criteria, collect the required documents, complete the KYC verification, and start operating the account instantly from anywhere.
