Keeping money in a bank account is instrumental in building your financial security, liquidity and long term wealth . Banks offer a variety of accounts based on individuals’ needs and financial requisites. Savings accounts come with exclusive features such as instant fund access and interest payouts.
As an account holder, you receive bank interest rates on your daily closing balance in the savings account that is credited monthly, quarterly, half-yearly or annually based on account terms. Let us understand why banks pay savings account interest rates to the account holders.
What is a savings account interest rate?
When you deposit money in a savings bank account, you receive interest payments on your funds. The interest is determined based on the rates decided by the banks and calculated on your daily closing balances. This means that the amount available in your savings account at the end of the day is considered the principal amount for that specific day. The savings account interest is calculated daily and credited to your account quarterly, according to the norms.
However, there are a few banks like IDFC FIRST Bank that offers monthly interest credit to your savings account, which proves to be beneficial in the long run due to the power of compounding. Moreover, the bank provides the best interest rates on your savings account across the Indian banking industry. To maximise your savings, you can also enjoy over 25 banking services free of charge. With an online instant bank account opening process through the app and IDFC FIRST Bank website l, you can now save a lot of time and effort!
Why do you get interest payments on your savings account?
The savings account interest payment is an obligation for the banks for several reasons. Inflation increases the cost of living every passing year. Without interest pay-outs, your money would devaluate over the period, eventually generating financial losses for you.
Another reason why banks pay you interest is that they invest your deposits in various industries and sectors for capital gains. The interest pay-out is a nominal profit share of your funds in the savings account. In fast-growing economies, positive interest pay-out is crucial for the banks to keep working effectively and gain your confidence to keep your money safe with them.
With the interest credits, you can achieve your long-term and short terms financial goals and build a corpus for the future. Since the savings account serves the purpose of keeping your money safe and immune to inflation, the savings account interest rate payouts are the best solution.
How to save more money in your savings account?
To maximise your savings account yield, you must choose an account that offers the highest interest rates. In addition, go through the bank’s terms and conditions, such as MAB (Monthly Average Balance) requirements, services fees, and charges. Choose the bank with the lowest charges to save more on the services.
The interest payment is one of the key savings account features that gives you capital gain and keeps your money from devaluation. Instant fund access for the daily monetary requirements is another benefit of a savings account. However, when opening an account, research online and find a suitable savings account that aligns with your needs.