Recently the biggest bank in India State bank of India (SBI) has cut down its interest rate on savings bank account. The other leading banks such as ICICI Bank, Punjab National Bank (PNB) also followed the same and reduced their interest rate. Then, I was searching for the available option where I can get the highest savings account interest rate.
A savings account is the most basic product of a bank where you can park your money, withdraw when you need it and channelise it for other investments. A savings account is also used to park the contingency amount as it is the easiest to withdraw money from a savings bank account.
The highest interest rate is given by Digibank by DBS. It is giving 7% interest for balance up to Rs 1 Lakh. Here is the full list of banks which gives high-interest rates on savings bank account.
I have not included the small finance banks such as Ujjivan Small Finance Bank, Equitas holdings and payment banks except airtel payment bank.
Should you open a New Bank Account?
Before you jump into a new bank account to get high-interest rates, you check the following factors:
The requirement for minimum average balance which will effectively lower the interest rate. If you are not maintaining that balance, you have to pay fine. Migrating or opening a new bank account means a new set of charges and you have to keep track of it. Apart from non-maintaining of minimum average balance, there are various charges levied by banks such as debit card charges, cheque book charges, transaction charges etc.
# Income Tax:
The interest on savings bank account up to Rs 10,000 is tax-free under section 80 TTA of income tax. It is a very good advantage for the persons who are in the 30% tax bracket.
# Additional Benefit:
Many banks are offering various additional benefits with the savings account. You assess those offers how it can add value to your savings account return. Somebanks are giving you a handful of feature for their savings account. The example of features are as follows.
- Free any bank any network ATM transaction
- Unlimited Fund Transfer
- Free VISA signature debit card for life
- No charges for banking transactions
- Free access to selected airport lounges
Other options to get more from Savings Account:
Option-1# Auto Sweep Facility:
This is a very good option with a savings account which will help you to earn more. Many banks offer this facility with different names.
When your balance in a savings account crosses pre-fixed mark, the extra money goes to a deposit account. This deposit account fetches more interest rate than savings account interest rate.
In the same way, when you withdraw money the main account falls short of money of minimum requirement and the money from deposit account comes to the savings account. It is highly liquidable and you don’t need to instruct to the bank. The threshold limit on which sweep in and out occurs is set by the bank and it is different from bank to bank.
Option-2# Fixed Deposit:
You can also open numbers of fixed deposit online when your balance crosses a certain limit. You have to do it manually every time according to your requirement. This is a very cumbersome process and difficult to manage. You may forget every time to open or break a fixed deposit also. It is better to go to auto sweep facility.
The continuous decreasing of savings bank account interest is a concern for the people and we are searching how we can get best interest rates on the savings account.
My suggestion would be not only to go with the highest interest rate, see the various fees or charges levied by the bank. Auto sweep facility is a good option to make more money.
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