Beat the dipping bank saving account interest rate

Lack of productive savings account options can be a problem with the ever dipping bank saving account interest rate. When rates fall on instructions of the Reserve Bank of India or due to monetary policies, banks feel pressured to lower the interest they charge for loans and also the interest they pay to the depositors. Savers and those who take loans from banks are the first to feel the impact and face a battle to get decent returns from their cash.

But let us first understand how interest system works. It all starts when RBI lends money to commercial banks in the country at low rates (Repo rate). Every time there is a cut in repo rate, banks borrow money from the RBI at lower interest rates and there is a decline in the interest rates on loans as well. Personal loans, car loans, home loans, etc., become cheaper. On the other hand, as banks tend to decrease the deposit rates, account holders see a dip in their bank saving account interest rate.

Check out the few risk-free options we have for our investors who are looking out for opportunities to generate additional returns.

1.     Fixed Deposits (FDs): FDs fetch a higher rate of interest than a regular savings account and is not prone to market fluctuations. Interest can be earned monthly, quarterly or annually as desired by the investor.  As per Income Tax Act-1961, earning on FD is exempted up to Rs 10000. Also, there are preferential interest rates for senior citizens.

2.     Money Market Account (MMA): It is a very safe way to get good returns. MMAs offer relatively high-interest rates and come with cash withdrawal privileges. The interest is tiered, compounded and credited monthly to accrue more profit as the account balance increases. Account-holders easily access their accounts through ATMs, online transfers and cheques.

3.     Liquid Funds: They have evolved as an ideal option for short-term investors allowing investors to earn steady returns over short time intervals. Liquid funds carry the lowest risk and belong to the debt category of mutual funds. Once the customer submits a redemption request, he gets the money within a working day. 

4.     Payments Bank Account: Modern banking systems do not require physical bank branches. Thus, the cost savings due to operational efficiency is handed over to customers by way of the higher interest rate. It is same as existing FD rates and highest savings account interest rate among all the banks.

So, next time interest rates hit rock-bottom don’t worry about your bank saving account interest rate. Just follow our tips and sail through the crisis.

Stay tuned with us at https://savingaccount.in/ for more details on a healthy savings account.