Tips to earn higher interest on your Savings Bank Account

Savings bank account interest rate can be increased through high yield savings accounts, sweep-in and sweep-out facility, certificate of deposits etc., with safety and liquidity of funds

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. 

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, you can take your money 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. Utilise idle 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. You can set a limit within your savings bank account and instruct the bank to transfer excess cash to the fixed deposit account whenever excess funds are available.

3. Go for criteria-based savings accounts

Check with your banker if they provide a higher rate of return on certain types of savings accounts. Specific criteria may include a higher minimum balance, a particular number of debit card transactions, etc. If you find such criteria acceptable, you can open such a high-yield savings bank account. 

4. Consider demography-based bank accounts

Many banks have specific savings accounts for children, youth, senior citizens, etc. These accounts may offer a higher interest rate than a regular savings account. Senior citizen savings accounts, in particular, are known to offer a higher interest rate. If you have a child, you can open a children’s savings account, deposit your money there, and enjoy a higher return on your savings. 

5. 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. 

6. Invest in certificates of deposit

You can use your savings bank fund to invest in certificates of deposit (CDs), similar to fixed deposits. All scheduled commercial banks and financial institutions in India are eligible to issue CDs. These CDs can have a tenure of 3 months to a year. If you don’t need the amount, you can reinvest the matured CD and continue to earn interest that beats a savings bank account. 

By following these tips, you can earn a higher interest income while enjoying the benefits of a savings account. While your income increases, your funds continue to remain in a liquid form, and you can use them almost immediately.

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.