Traditionally, savings accounts are used primarily for savings. However, a savings account is often ignored when it comes to growing money, primarily due to its modest interest rates. But, now things have changed, and savings accounts can also yield better interest than before if one knows the right strategies.
Almost all individuals in India have one or more savings accounts. A dedicated savings account app makes it more accessible to account holders. Thus, it is necessary for savings account holders to know how to utilise it to maximise savings.
Strategies to Grow Your Investment Using a Savings Account
Here are some tips that you can use to grow your wealth using a savings account –
- Choose the correct type of savings account
Savings accounts in India are now available under different names based on their purposes. Senior citizen savings accounts, corporate employee savings accounts, women’s savings accounts, kids’ savings accounts and high-yield savings accounts are some popular categories to choose from.
These savings accounts usually come with great benefits and exclusive facilities. For instance, the senior citizen savings account offers higher interest rates than others. At the same time, a tax-savings savings account ensures keeping your tax liability low and so on.
Thus, individuals looking to grow their money through savings accounts must choose the right category. At the same time, several banks now also offer online savings accounts so that individuals do not have to visit the branch physically for most transactions. However, in that case, e-KYC or video KYC is mandatory to open such accounts.
- Compare the interest rates beforehand
All banks allow individuals to open a savings account with them, but their interest rates also vary. Thus, individuals looking to grow their money in a savings account must search for high-yield savings accounts to ensure more savings.
While comparing the interest rates, individuals must also consider different accounts’ minimum average monthly balances. Besides zero-balance accounts and certain others, most savings accounts have minimum average balance criteria that account holders must maintain to avoid penalty.
- Leverage auto-sweep option
Budgeting helps individuals grow their money. It may sound absurd, but it is one of the ways to grow your money without taking any risks. And, to help you make the most of your savings, financial institutions have introduced an auto-sweep option. This facility enables the account holders to set a monthly limit for their expenses, and the rest of the amount automatically goes to a Fixed Deposit (FD).
Thus, individuals must have proper financial management. They can opt for the auto-sweep option if they know how much to spend in a month. Since the interest rates on FD is better than a savings account, individuals can maximise savings on idle funds. Generally, the savings account interest rates vary from 2.50% to 5% annually. On the other hand, the FD interest rate usually ranges from 6% to 8% annually, depending on the maturity period and other factors. Moreover, individuals do not withdraw and spend the money saved in an FD more frequently.
- Make use of bank bonuses and offers
Several banks in India offer introductory or welcome bonuses to their customers. Likewise, banks also offer special discounts on using their debit cards on different e-commerce websites. Using this debit card, account holders can enjoy festival discounts, offers on food ordering apps, etc.
Individuals can now also open an e-wallet and link it to their savings account and get cashback on every transaction. All these ensure an individual earns or saves money while spending.
- Open more savings accounts
Having more than one savings account actually benefits you. Firstly, you can diversify your savings. Secondly, you get more withdrawal power if you need cash. Thirdly, usually, the primary savings account is linked with UPI/wallet, etc., to pay online. Having a second account allows you to keep aside certain accounts and limit overspending.
It is better if you do not link any online transaction options with the secondary account. You can also avoid using a debit card for the same so that you have substantial savings to stay afloat on rainy days.
Note that you can choose different types of savings accounts based on your unique needs. Managing multiple accounts is now also simple, thanks to savings account apps. Besides showing the account details, such apps also allow you to pay bills online, scan and pay at stores, transfer money within banks, to a friend or relative, etc.
- Set goals for savings
One of the reasons individuals struggle to save money in a savings account is a lack of discipline, let alone growing money. Thus, it is necessary to have a financial plan to maximise savings. Note that the savings plans should be short-term, and they must be realistic and achievable. Otherwise, it will be hard to stick to the plan.
Once you get comfortable with short-term plans, get advanced to long-term savings plans. It will ensure consistency, and you can actually see growth. For better control, you can download and use a savings account mobile app for your account.
Parting words
Savings accounts have been crucial in India’s drive to increase financial inclusion. Moreover, this account is often the first step in beginning one’s financial journey. Therefore, following the strategies mentioned above, individuals can make the most of their savings accounts and maximise their savings as well. After all, the more you save, the more secure your future will be.
