The COVID 19 pandemic has made us all realize the necessity of investments in the long run. It’s always better to have your money earn some interest than to let it sit idle at home. There are multiple investment options available out there, ranging from low-risk options to high-risk options covering metrics like the stock market, bonds, mutual funds and more. Though the investment market is volatile in nature, thorough comparisons can fetch beneficial results in the long run. Besides, where you should put your money depends on your timeline and whether you can afford to lock in your money for a fixed period or not.
However, a savings account is a great option you might want to opt for to park your money safely and securely for a flexible period. These interest-bearing deposit accounts are great to have an emergency fund to cater to your short-term needs and emergencies. There are several online lenders, small banks and other banks that are bridging closer to other long-term and low-risk investment options.
How some savings accounts may benefit you more?
First off, savings accounts are among the safest options to keep your funds safe. If someone were to invest in a Fixed Deposit, which is a low-risk investment option, they’d have to lock in their money for a fixed tenure and lose liquidity privilege. Whereas, with a savings account they’ll still be able to earn interest on their deposit and enjoy liquidity. Generally, banks allow unlimited ATM withdrawal for account holders. You can also open multiple savings accounts, serving different purposes.
Some banks offer up to a 7% interest rate on their savings account. For example, if a bank offers a 6% interest rate on their savings account, it earns a total interest of ₹16,911 (before tax) after 5years for a deposit of ₹50,000. Some banks offer lower interest rates than this on FDs and that too with less liquidity.
There are a variety of savings accounts offered by different banks. Out of all of them, a high-yield savings account pays multiple times more than a normal savings account. Online banks generally offer this facility, but there are traditional banks as well, allowing investors to open savings accounts online. By depositing their money in a high-yield savings account, they get to earn significantly higher interest rates. You might be able to earn more with riskier investment options, but a high-yield savings account assures proper safety of the invested principal with federal insurance and higher yield. Opening a high-yield savings account online is quite a simple task and takes about 15 minutes to do so.
Best Savings Account Interest Rates
Amidst COVID 19 pandemic, banks and financial institutions have been lowering their interest rates but several small banks are offering high interest rates on savings accounts:
IDFC FIRST Bank offers a 6.00% savings account interest rate on a balance of up to ₹1Cr. There are a variety of benefits attached to it, including cashback, airport lounge access and unlimited ATM withdrawals.
Bandhan Bank offers an attractive interest rate of 7.15% on the incremental balance above ₹50 Cr. A 3% interest rate is offered for an amount up to 1 Lakh, an interest rate of 6.00% is offered for an amount from ₹1,00,000 to ₹10 Cr and an interest rate of 6.55% is offered for an amount starting from ₹10 Cr up to ₹50 Cr.
IndusInd Bank offers an interest rate of 6.00% for a total balance above ₹10 lakhs, a 5.00% interest rate from a balance above ₹1 Lakhs up to ₹10 Lakhs, and a 4.00% interest rate for a balance up to ₹1 Lakh.
Utkarsh Bank offers a 7.25% interest rate above a total balance of ₹25 Lakhs, a 6.00% interest rate for a total balance above ₹1 Lakhs up to ₹25 Lakhs, and an interest rate of 5.00% for a balance up to ₹1 Lakh.
Generally, investors expect higher interest rates with long term investment options. But with rising competition, financial institutions are adjusting their savings account interest rates. If you pay close enough attention, you can benefit from them significantly. It’s essential to balance your gains with your risk tolerance. You should do your research well according to the amount of money you’re depositing and look for the financial institution with the highest interest rate and conditions that cater to your needs.