Curious about the returns from your Savings Bank Account? While the primary purpose of maintaining a bank account is liquidity for emergencies and routine expenses, maximizing the interest on idle funds can be an added benefit. The primary concern with savings accounts is typically the interest rate, which tends to be lower compared to various investment options. However, there are ways to optimize the monthly interest rates on your savings account through some practical tips. Curious about what they are? Let's dive in and take a look.
How to Get More Interest in a Savings Account?
1. Opt for a Digital Savings Account:
Opt for a digital savings account. These often come with sweet interest rates because they keep costs low and let you manage everything online. No need to queue up at branches—your smartphone becomes your banking buddy. Take, for instance, high-interest rates, zero account balance requirements, and nifty perks like cashback on your debit card—all accessible through user-friendly apps or websites.
2. Keep a Solid Monthly Balance:
While banks often recommend a low monthly balance for Savings Accounts, you can boost your interest earnings by maintaining a higher average monthly balance. The concept of compounding works more favourably with a substantial balance. For instance, a 3% interest rate on INR 10,000 yields INR 300, but the same rate on INR 1,00,000 results in INR 3000. Banks typically offer an incremental interest rate structure.
3. Optimize FDs with Sweep-in:
Establish links between multiple Fixed Deposits (FDs) to your savings account and enable the sweep-in feature. This feature allows you to withdraw funds without breaking the entire FD, providing liquidity to your Savings Account while still earning interest on your FDs. It's a strategic way to balance accessibility and interest accrual.
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4. Invest in Certificates of Deposit (CDs):
Instead of letting your savings just sit there in your savings account, consider investing in Certificates of Deposit (CDs). These work like fixed deposits and all banks and financial institutions in India can issue them. CDs typically range from 3 months to a year. If you don't need the cash immediately, you can reinvest the matured CD, continuing to earn interest that beats your regular savings account.
5. Open a Recurring Deposit:
Fixed deposits (FDs) are the usual go-to for earning interest on a lump sum. But let's be real, not everyone has a hefty chunk of extra cash to stash away in FDs. That's where a recurring deposit (RD) comes in as your savings bank. With an RD, you commit to investing a fixed amount every month, and it earns you interest. Most banks offer RDs with a return rate ranging from 3.7% to 5.25%. The actual returns depend on how long you're in for. For example, a 1-year RD might give you 5%, while one with a 5-year tenure could fetch you 5.25%. The cool thing about RDs is that you can start with a small, manageable amount – like just Rs 1000 per month.
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Closing Thoughts
So there you have it, money maestros – a few tricks to up your savings account game. From going digital to exploring some investment avenues, there are plenty of ways to make your money work for you. The key is to find what suits your style and watch those interest earnings grow. Happy saving!
