Choose your investment plan wisely to get the highest interest rate

Shopping for an option to have the best returns? We advice you look for ones that offer high interest rate. If you have been visiting banks and surfing the internet then you would probably have realised that there are banks that claim to offer ‘highest interest rate’. They are not wrong in their claims, but banks offer different interest rates on varied investment programmes. And secondly, no bank can help if you are not a good saver yourself. 

Every investor wants to make investments that fetch them high returns as fast as possible. No wonder, why investors are always on the lookout for top investment plans where they can double their money in little time and with little or no risk.

1. Direct equity: This is a high-risk asset as it guarantees no returns. However, the investors stand a bright chance of getting higher than inflation-adjusted returns compared to all other asset classes. There are a lot of investors who invest in it and often bag the highest interest rate.
2. Debt funds: These are best suited for investors who look for steady returns. These are less volatile but invest in fixed-interest generating securities like corporate bonds, government securities, treasury bills, commercial paper and other money market instruments and the market return is indeed good.
3. National Pension System: It is a long term retirement-focused investment product and the highest interest rate for 1, 3, 5, years can be said to be around 9.5%, 8.5% and 11% respectively.
4. Check out online-only banks: These are definitely better than the traditional banks. This is because while traditional banks have too many overhead expenses like paying for utility like (electricity and water charges) salaries of bank personnel and other staff, rent/ purchase of building, infrastructure, maintenance and much more, online-only banks save on all these and channelize the amount to their customers in the form of interest.
5. Build a Certificate of Deposits (CD) ladder: CD ladders are a smart way of investing your money. It requires the candidate to split their money and invest them in different CDs for varying term lengths. This investment programme offers higher rate of liquidity than a single CD and allows you to earn a higher return rate than you would get with a regular savings account.  
6. Senior Citizens’ Saving Scheme (SCSS): This is a must-have choice for the elderly citizens. It can be availed from a post office or a bank by anyone who is above 60-years-of age. Though it has a fixed tenure, it can be extended by years once the scheme reaches maturity. So, you see even if they may not be the ones offering ‘highest interest rate’ they are definitely having the best bargain.

Why BSBDAs have an upper hand over regular ones?

Many people are in the habit of maintaining more than one savings account which requires them to maintain a minimum balance in each one of them. This not only blocks huge amounts of their savings, but they also have to pay a penalty in case there is non-maintenance of the prescribed monthly average balance (MAB). So, you see, having such accounts is one thing and maintaining them is another, and we tell you that maintaining them is not everyone’s cup of tea.

Therefore, we advise keeping just a Basic Savings Bank Deposit Accounts (BSBDA) that has many advantages to it apart from being a zero-balance savings account. Doing so will help the account holder streamline the transactions.

The account caters to those hailing from weaker sections of the society and the guidelines, as prescribed by the Reserve Bank of India (RBI), are applicable to all scheduled commercial banks across the country. This includes even the foreign banks having branches in India.

However, the RBI has left it to the banks to provide or charge additional-value added services like issuance of cheque books, etc.

Apart from this, what lures customers towards the BSBDA is the interest rate. It is the same as that of any regular savings account. So, it is almost like, ‘having the cake and eating it too’. This means that the account holder enjoys all the benefits that a regular savings account holder has access to and does not have to worry about maintaining the minimum balance.

Below given are some features of this Basic Savings Bank Deposit Accounts in nutshell

• It does not require initial deposit 
• No minimum balance required  
• Aggregate of all credits in FY must not exceed Rs 1 lakh
• Balance amount must not exceed Rs 50,000
• Can be opened by any individual or Hindu Undivided Family (HUF) entity not having any other savings account in that particular bank or its branches
• Offers free-of-cost banking facilities, like ATM cum-debit card, deposit/ withdrawal, online payment channels, etc
• Offers four free cash withdrawals including withdrawals from ATM, bank branch, online fund transfer or EMI in a month  
• Allows unlimited number of deposits in a month
• Validity of small accounts is 12 month which can be extended by another 12 months.

However, there is a little catch in it. If a customer has another savings bank account, it should be closed within 30 days from the date of opening BSBDA. This is because there is no provision to convert a regular account into a no-frill account.