For every Indian, irrespective of their financial status, a savings account is a must for their financial needs. Savings accounts allow you to save money, transfer funds, withdraw funds and also earn interest on the money you have in them. It is rare to find a better investment product than a savings account that offers both liquidity and interest. The advantage of having a savings account is that not only will you save some money, but you will also be able to withdraw cash whenever you need it.
Savings accounts provide an easy way to achieve short-term financial goals. Savings accounts come in various forms, including specialized accounts for kids, savings accounts for women, and pensioners’ savings accounts. You can choose an account that fits your lifestyle and usage.
Opening a savings account is really hassle-free and the account can be used for payments, remittances, investments, and receiving funds. In addition, a savings account provides a regular income stream. Savings account interest rates which were high just a few years back, have become historically low now. The current rate is between 3.5% and 4%. However, there are ways to increase the earnings from the standard savings account, even with low rates.
Three ways to Maximize your Savings Account interest rates
Opt for Sweep In Facility
The Sweep In facility converts any amount above a particular limit into a Fixed Deposit automatically. During times of fund shortages, the bank automatically liquidates your Fixed Deposits to meet these needs. If excess funds are not used, the bank pays interest on the Fixed Deposits.
For example, suppose the minimum balance needed to be maintained is ₹25,000, then any amount over ₹50,000 will be converted to a Fixed Deposit. Beneficiaries of savings account will receive higher interest rates on this money. A sweep-in facility will be initiated according to your instructions. As opposed to leaving idle funds in a savings account, it is better to use them in Fixed Deposits and earn at those rates.
Open the following Savings Accounts
You can find varied savings account types from several banks such as Kids Savings Account, Senior Citizens Savings Accounts, and Youth Savings Account. Additionally, these types of accounts offer other benefits in addition to the higher savings account interest rates. In contrast to regular savings accounts, Senior Citizens Accounts usually offer higher interest rates. It is possible to earn higher returns from this account by adding Sweep In functionality.
Maintain the Average Monthly Balance
The minimum balance does not have to be maintained every day of the month. People who use their savings account for their monthly expenditures, such as paying bills and other expenses, will find this feature particularly useful. It is enough to avoid penalties from the bank by averaging the amount kept in the savings account to the minimum monthly balance.
A balance of ₹10,000 per month does not require that you maintain it every day of each month, for instance. Your account will still earn interest if you adjust your expenditures and inflows so that you have a monthly average of ₹10,000. Thus, you can still earn the same Savings Account interest rates on your monthly average. A Zero Balance Savings Account does not require a minimum balance to be maintained, and there are no fees associated with it.