Savings accounts are the first step to opening the doors to multiple banking services, such as debit cards, investment schemes, online banking, and easy cash withdrawals from ATMs. The security and liquidity of funds that savings accounts offer to make them a high-priority bank account for everyone. However, the bank savings interest rates are low. With a few clever tips, the good news is that one can earn more on the funds parked in a bank savings account.

Tip to Earn More Through Savings Account

In return for the funds an individual parks in a savings account, the bank pays him interest returns to encourage him to save more. The bank savings interest rates are calculated on the daily average balance in a savings account, and it gets credited monthly or quarterly, depending on the bank’s policies.

Banks revise the interest rates they offer on savings accounts from time to time in accordance with the Reserve Bank of India (RBI) mandate. Now that we know how interest rates work let us see how we can earn more from our savings accounts.

• Look for banks offering high-interest rates on savings accounts: The easiest way to increase earnings through a savings account is to open an account with a bank giving industry-best interest rates. Some leading banks may offer an interest rate of up to 6.50% on a savings account. Better interest rates directly materialise into better earnings.

 

• Maintain a higher monthly average balance in the savings account: Often, banks ask the account holder to maintain a minimum balance. However, they can consider depositing a higher amount in their savings accounts to maintain a high monthly average balance.

Banks follow an incremental interest rate on balance, and the power of compounding works in the account holder’s favour when the monthly average balance is higher.

 

• Consider the most suitable savings account option: Banks offer a variety of savings account variants to customers. Banks offer a variety of savings accounts, such as senior citizens savings accounts or minor savings accounts, or other factors, like women’s savings accounts and savings accounts for non-resident Indians.

These accounts usually offer the account holders better interest rates and other benefits. Before opening a savings account, check if you qualify for a special account with better features and interest returns.

 

• Use the savings account funds effectively: Banks offer a sweep-in facility on savings accounts. Under this facility, the account holder can limit the savings account balance. As soon as the amount deposited in his savings account goes beyond the set limit, the bank transfers the additional funds to a Fixed Deposit account for the customer.

Fixed Deposit accounts offer higher interest returns than savings accounts. In case of a financial emergency, the account holder can get these funds transferred back into his savings accounts for better liquidity. It allows the account holder to earn better interest returns on his savings account deposit without affecting its liquidity.

 

• Earn indirectly through various investment options: Once an account holder has enough funds, they can route their savings to earn more for them. An investment in a Recurring Deposit (RD) or a Systematic Investment Plan (SIP) can garner higher interest returns than the savings account interest rates.

Some banks do not require maintenance of a minimum balance on a digital account. It helps when the investment in a recurring deposit or systematic investment plan is made through the account.

 

• Use your idle funds: A good way of increasing your savings account balance to earn higher interest returns is by consolidating and depositing idle cash into the savings account. Not only will it increase the account balance, but it will also restrict an individual from splurging.

Banks offer debit cards with savings accounts. These debit cards offer cardholders reward points, discounts, travel benefits, gifts, cashback, and many other benefits. Get a debit card on your savings account and use it to increase your earnings.