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.

Get highest interest rate savings account and be an effective saver

No bank can ever give you the highest interest rate saving account if you are not an effective saver yourself. The first step always begins with you saving every penny you earn or inherit. Of course, we all have our ways of saving. Some of us may sacrifice that delicious Mocha Latte while some may skip a birthday bash to save those pounds; others may give up on the idea of vacation via road trip and rather choose a means of public transport.  

Below given are a few tips to boost your interest rates. Check them out for yourself.

1. No more traditional banking: These brick-and-mortar banks have loads of overhead costs like paying the office rent or purchase and maintenance of an official building and infrastructure, paying the personnel and other staff, utility bill and lots more. So it is time to switch to online-only banks. These banks save a lot of overhead costs and channelise it to their customers in the form of high-interest. Take advantage of these online-only banks and be an effective saver.
2. Build a CD ladder: This requires you to split your money and put it in different Certificates of Deposits (CDs) with different term lengths. CDs may not have the highest interest rate savings account but it is better than what your banks offer on regular savings.  A CD ladder offers more liquidity than locking all your money into a single CD. It also minimize your risk and allows you to earn a higher return rate than you would get with a regular savings account.
3. Don’t overspend: It is alright if you have to buy gifts for friends and relatives for their birthdays and anniversaries and make occasional payments for insurance premiums, etc. But we warn you against overspending or indulging in unnecessary things like taking a flight instead of a train, a vacation to an exotic location when you can visit a scenic site which is close to your residence or city and you haven’t unexplored, and so on. You could also try combining work-pleasure trips or if your employers organise a vacation the cost (partial or full) of which will be borne by them.
4. Set short-term goals: The fact is that people tend to save more and successfully when they have short-term goals. Having long-term goals can be weary and the motivation factor could diminish after a few months and you could end up using the amount for some other purpose. This way you could have the highest interest rate savings account ever possible.

There is nothing that can hold you back from becoming an effective saver if you follow our tips to the ‘T’. Stay with us for more on https://savingaccount.in/blog/digital-bank-account.

Be wise and get yourself a medical emergency savingaccount

Life springs surprises when you least expect it.  And a medical emergency is no different. A person may be fine one moment and the other minute he would be on his way to get some medical attention. The situation may be unpredictable as it would be difficult to assess the nature of expenditure. Under such circumstances, your medical emergency fund could work as a shock absorber between you and your life.

Check out more features about a medical savingaccount.

Right time to start and stick on 

‘Now’ is the right time to start. Financial gurus going by the age-old adage ‘tomorrow never comes’ say there is nothing more disastrous than postponing opening up of a medical emergency account. But this is just the first step. The second most important step is to stick on to it and not get tempted to use the money on other things of indulgence.

Easy accessibility

Do you remember how well our grandmothers hid some money in those grocery cans, in-between books and under the bed mattresses when they could have easily stowed it away at better places? They did so not only from getting all their money raided in one go but also for easy accessibility. Isn’t it similar to the savingaccount? We have to meet our different goals and reduce the temptation of shelling out all the money at one go – and of course, easy accessibility? A medical emergency fund must be easily accessible for when you are ill and have not much time and energy doing bank transactions.  

How much you must save?

Ideally, there is no specification on how much you must save in savingsaccount for a medical emergency. But whatever surplus amount is left after paying off monthly dues and other expenses must be invested for a medical emergency fund. This will also help you avoid the habit of irrelevant spending. Although, living comfortably is no sin, overindulgence could be.

Here, we are not advising you to live miserly. There is nothing wrong with pursuing things as long as you don’t dent your financial security. All we are telling you is to get over the habit of indulging in every desire and save every penny you can for those tough times.

Follow our mantra for a happy and secure financial future - savings shouldn’t just be a temporary phase initiated to deal with a financial crisis, but a way of life.

Stay logged in for more on https://savingaccount.in/.

Lesser known facts about minimum balance in savings account

Minimum balance in savings account is the mandatory lower limit of money prescribed by a bank. This means that if account holder at any given point of time dips below the prescribed limit, he would not be liable to receive the benefits like denied interest payments and may even have to pay a penalty. A customer earns his interest based on the minimum average balance maintained in the account and the same may vary from bank-to-bank.

Earlier when the Reserve Bank of India (RBI) introduced the concept of savings bank accounts with a minimum balance. This gave the banks the authority to charge customers with a requisite or pre-determined amount if the customers failed to maintain the balance.

Compared to private sector banks, most public sector banks are known for maintaining savings accounts with a lower limit of money. If a minimum balance is not maintained in the account, the customer is liable to pay charges on non-maintenance of AMB as applicable. While some Public sector banks levy a charge anything between Rs 30 and Rs 500 for non-maintenance of minimum balance in savings account, private sector banks charge from Rs 500 to Rs 750. This compulsory lower-limit balance is also known as the Average Monthly Balance (AMB) or Average Quarterly Balance (AQB) and it is generally higher in urban areas than in semi-urban and rural areas.

The penalties are charged in proportion to the extent of shortfall observed. Secondly, several banks require customers to maintain a minimum balance for a digital savings bank account as well.

Before we proceed on other important points, it is important to understand why banks levy this mandatory lower-limit amount on account holders. Remember, these brick-and-mortar banks require high-value maintenance. This means they have to make heavy investments in setting up branches and ATMs, payment of staff and back-office operations, maintaining call centres, and much more. And they have their ways of meeting these expenses.

If the above gives you the impression that banks are siphoning off their customer’s money to meet their expenses, then we would like to tell you that this is not the case. On the contrary, they help the customers maintain the mandatory lower limit by providing them online banking and sends them SMS alerts if the amount goes below the limit.  Apart from this, some banks are also known to waive off the minimum balance in savings account if the account holder has a fixed or recurring deposit for about a year with the bank.

Join us for more on savings bank accounts and minimum balance penalisation on https://savingaccount.in/blog/digital-bank-account.

Help your child graduate from piggy to real bank with savings account

Probably we all had our first independent savings bank accounts when we first started to work and our companies provided us with bank forms so that they could put our monthly earnings in it. Also, many of us would have held joint accounts with our parents and also occasionally visited the bank with them to carry out certain transactions. Isn’t it? That was a thing of the past. Now, children as young as a-year-old, have a savings account. The facility existed even when we were young, but the concept was not much in vogue.

Today, banks are promoting ‘child savings account’ more than ever and even parents are welcoming the idea. But getting the best deal for your baby is a tough thing to do and you need to check-out the best suitable options that would help your child’s funds grow steadily if not by leaps and bounds.

Here are a few tips that you as a parent must explore while opening a savings account for their child.

1. Security features: This should be the top priority while finalising a savings account for your child. Most accounts come with the security of zero liability. This protects the little account holder’s debit card from theft or unauthorised purchases. Additionally, opt for text alerts to your mobile number to stay updated about every transaction made on your ‘child savings account’.
2. E-banking facilities:A lot of banks offer free internet or mobile banking access apart from free email, prepaid mobile recharge, pay utility bills, stop cheque payment via SMS facilities and more. Do not forget to encash on them.
3. Additional benefits: Banks offer additional benefits like educational insurance cover, no monthly fees, free cheque book and passbooks annually, unlimited free transactions, etc. Avail all of them.
4. Freebies and rewards: Debit cards are issued to children above 10-years of age and come with a withdrawal limit of maybe Rs 1,000 and above as daily spending limit and a spending limit of Rs 8-10,000 at merchant locations. Some banks even add a personal touch to the junior account holder’s card by putting a fun image or the child’s photo embossed over it. Most banks also offer exciting rewards programmes like book vouchers, movie tickets and discount vouchers for the account holders of child savings account.

Financial experts say that it is never too early nor ever too late to have a savings account. Listen to them.  Most commercial banks, microfinance lenders, cooperative banks, some non-banking financial corporations and other new-age digital financial entities in the country offer the facility of savings account for minors.

Check out more on https://savingaccount.in/blog/kids-bank-account.

Gift your kid a savings account

If your daughter is one of those who have been responsible with her pennies, she deserves a saving account for sure on her 18^th birthday. Since 2014, there has been a visible increase in the number of savings accounts for minors in private and public sector banks after the Reserve Bank of India (RBI) gave banks a green signal.

The Central Bank authorises parents and guardians of children less than 10 years of age to operate the savings account after they can operate it independently. Once the child turns 18, the account becomes dormant and in order to get the regular benefits and interest, it is essential to convert it into a regular savings account. It is equally important to allow them to make harmless mistakes and let them learn from them. The idea must be to train or educate the child and not incur financial losses in any way. You could also opt for a kid’s a savings account with restricted withdrawals or expenditure via debit cards is a good idea till your child is matured enough.

Just opening a savings account without imparting the right education to little ones could result in more harm than good for your children’s future. So, before you finalise on the savings account for your minor or teen, scan banks that have the lowest minimum balance criterion. Doing so will the money from getting locked up at low interest.

So, a savings account with a bank looks like a perfect gift for children to make them learn about banking. Make the most of this opportunity to teach your child about money matters and being responsible.

Wonders of a minor’s savings account:

Kid’s savings account teaches them 

• to plan ahead
• to stay focused on goals and priorities
• to save for things till they can afford it
• the value of money 
• to learn basic math skills
• to grow their money  
• to become comfortable with bank operations and financial dealings.

Documents required for opening kids savings account

To open a savings account for minors, you may be required to submit a few documents. 

These include 

• a recent photograph of the minor applicant
• proof of date of birth of minor (birth certificate issued by Municipal Corporation or Passport)
• proof of relationship between the parent/guardian and the minor applicant (ration card or life insurance policy), 
• PAN of the parents/guardian and address proof.

A savings account for minors is an ideal way to expose them to financial education and first-hand experience in money matters. It is a good idea to encourage children to be responsible with money and make sincere efforts to answer their questions on bank operations.

We, at https://savingaccount.in/blog/kids-bank-account have all the important information that you must know about children’s savings accounts. Stay with us for more.