Leveraging Savings Account Interest Rates to Achieve Your Financial Goals

Posted on Tuesday, December 26th, 2023 | By IndusInd Bank

In the pursuit of financial stability and success, it is important to understand how to make your money work for you. Savings accounts provide a secure and liquid avenue to park your money while earning you interest. It can be a valuable tool that serves a variety of purposes beyond just parking our funds. The savings account is where most of us keep our idle money, receive our income and carry out our day-to-day transactions.

Interest earned on your savings account serves as a passive income and it can play a pivotal role in achieving your financial goal. In this blog, we will explore how to leverage savings account interest rates and how they can work harmoniously with your financial strategies.

Best use cases of savings accounts

Online savings accounts serve several essential purposes in personal finance, making them an integral part of our financial activities:

• Emergency fund: The emergency fund is crucial to tackle uncertainties of life. A savings account is the ideal place to park your emergency fund. This fund acts as a financial cushion, providing liquidity for unforeseen expenses like medical emergencies or urgent repairs.
• Short-term goals: If you have short-term financial goals such as saving for a near holiday, purchasing any electronic device or making a down payment on a vehicle, a savings account provides a safe and accessible way to accumulate the necessary funds.
• Liquidity and convenience: Savings accounts online offer high liquidity. It allows you to withdraw funds quickly through ATMs or online transactions. They are also convenient for bill payments and routine financial transactions.
• Parking surplus funds: You can open a savings account to hold extra money while waiting for better investment options. It prevents idle cash from losing value and helps earn at least a modest interest rate.

Normal interest rates on savings accounts

Knowing the typical interest rates offered on savings accounts is crucial before diving into strategies for leveraging them. Historically, the interest rates on savings accounts in India have been relatively modest with most banks currently offering an annual interest rate between 2.5% to 3%. Some banks may offer a higher rate depending on their policy. Usually, it translates to earning around ₹250 to ₹300 annually on a savings account balance of ₹10,000.

However, interest rates can vary significantly among banks and financial institutions in India. Factors such as the type of account, account balance, savings account scheme and the bank’s policies can influence the interest rate you receive. Additionally, interest rates in India can be subject to changes based on the Reserve Bank of India’s (RBI) monetary policy decisions and the prevailing economic conditions.

How can you leverage savings account interest rates to achieve your financial goals?

The savings account opening process has become quite simpler with digital banking. While savings accounts may not offer the highest returns compared to more aggressive investment options such as stocks or mutual funds, they play a vital role in your overall financial strategy. Here’s how you can leverage savings account interest rates in India to achieve your financial goals effectively:

1) Automated FDs

To ensure consistent savings, you can set up automated transfers from your primary savings account online to sweep accounts. Many banks in India offer the option to transfer the excess balance in your savings account and convert it to FD.

For example, the Indus Multiplier Max Savings Account automatically turns balances over ₹20,000 into fixed deposits, offering you higher interest rates. This provides you twin benefits of savings account flexibility and fixed deposit returns. Further, it also provides 25% off on locker facilities. Other perks of this premiere savings account include cashback, attractive offers and complimentary insurance cover worth ₹1.50 lakhs with your platinum debit card.

2) Take advantage of higher interest rates

Opening savings accounts with certain financial institutions, like IndusInd Bank helps you earn a higher interest rate on savings accounts. You can explore the offerings of various banks and consider switching to an account with a more competitive interest rate.

Summing up

Leveraging savings account interest rates in India is an essential aspect of achieving your financial goals. Opening an account with the right financial institution will not only allow you to earn lucrative returns but also benefit from liquidity, safety and accessibility. To make the most of your online savings account, you should use it as an emergency fund, automate your savings and consider high-interest generating options like sweep facility or recurring deposit accounts.

IndusInd Bank pioneer when it comes to providing feature-rich online savings account that minimises your charges and maximises your returns. You can pick any account number of your choice, fill in all the required details, add funds, and complete video KYC from anywhere and at any time. Open your IndusInd Savings Bank Account Now!

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.