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How interest works on savings accounts
Posted on Wednesday, January 31st, 2024 | By IndusInd Bank
If you are looking to manage your finances with ease, simply open a savings account. You can seamlessly transfer funds, make digital payments, automate transactions, save for various goals, and more. Having a savings account is like having a multi-functional tool in your financial toolkit. But the cherry on top? Besides all these benefits, the balance in your savings account earns interest. But have you ever wondered how this interest works? How much will you earn, and what decides the rate of your interest earnings? Let’s answer all these questions in detail below.
So, how does a savings account earn interest?
Savings accounts do not have a specific time restriction or maturity period. As long as you maintain funds in the account, you will earn interest. The interest is calculated on the basis of your daily closing balance and is credited to your account at quarterly intervals.
The formula to calculate the savings account interest rate is:
Monthly interest earnings = Daily Balance * (Number of days) * Interest / (Days in a year)
Let’s say the daily amount is ₹3 lakh, and the interest rate on the particular savings account is 4% per year; the calculation will be as follows:
- Daily balance: ₹3 lakhs
- Number of days: 30
- Interest: 4%
- Days in the year: 365
3 lakhs * 30 * (4/100) / 365 = approximately ₹986.30 per month.
Tips to maximise your interest earnings
Here are some tips to increase your savings account interest smartly:
Choose the right banking partner
Select a bank that offers the best interest rate on savings accounts to help you grow your funds significantly. Also evaluate useful account features, minimum balance requirements, withdrawal limits, and accessibility to check overall benefits.
At IndusInd Bank, you get competitive interest rates as well as premium banking services customised as per your needs. The most convenient part? You enjoy a 100% online bank account opening process and earn interest on your account from day one.
Earn FD-like interest through auto-sweep facility
The Indus Multiplier Max Savings Account by IndusInd Bank comes with a ‘smart sweep’ feature that lets you earn more on your funds. When your savings exceed ₹20,000, the surplus funds are automatically transferred into a Fixed Deposit (FD) in multiples of ₹1,000. This process allows you to earn higher interest, typical of fixed deposits while maintaining the liquidity of savings accounts.
If your account balance drops below the set minimum threshold, funds are transferred back into your savings account from the linked FD. No premature closure penalty applies here.
Take advantage of promotions
There are often promotions from time to time to attract new customers. These can include special offers, sign-up bonuses, or higher interest rates. It’s wise to stay alert for such opportunities.
Just be sure to review the terms and conditions so that the promotion aligns with your savings goals. These perks can give a short-term yet significant boost to your savings and understanding their details is important to maximise their value.
Get a digital savings account with IndusInd Bank
Each type of savings account has different interest rates and terms, hence make sure to compare all options first to find the one that fits your banking needs perfectly.
You can choose Indus Delite Savings Account to get a premium and hassle-free banking experience. Get the best interest rates, along with other exclusive features like a 100% paperless process, delightful deals, reward points, zero balance requirement, insurance cover, and minimum fees.
So, don’t delay and grab the opportunity to enjoy seamless banking with personalised benefits. Apply for an IndusInd Bank Savings Account today!
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author 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.
