Supercharge Your Savings Account Interest: Unlock Hidden Potential
Your savings bank account is a fundamental financial tool that provides liquidity and security. While it may not offer the high returns of other investment options, there are ways to increase the interest earned on your savings account. By following these strategies, you can make your money work harder for you without taking on additional risk.
Choosing the Right Bank
Always compare the interest rates offered by various banks which suits your requirements. Read the various terms and conditions attached to the various nature of account options they are offering. For example, In Bank of Baroda, they will give some extra interest rate for the savings account balance if you are maintaining balance above 1 Lakh rupees.
FD and Savings Account
The main difference between FD and Savings account is the lock-in period. Unlike Savings account, Amount kept in FD to earn some extra interest will not give you the higher liquidity. Even though you can able premature your FD on the basis of your urgency, that will result into a loss of interest for the period held in FD. In that way, I would like to share an option which is provided by Kotak Mahindra Bank in the name of Activ Money.
Activ Money
How it Works?
By activating active money in your bank account, if you are having balance over and above 25000, then the excess money (in multiples of Rs.5000) will be automatically transferred to one new FD account for 180 days. For that FD, you will get up to 7% interest per annum. And you can anytime withdraw or transfer that amount as if it is kept in your savings account. And also there will not be any premature penalty levied in respect of your withdrawal.
How to Avail?
It can be easily activated from your Kotak Mahindra bank’s mobile banking application. In the home screen of your application, there will be an option “ActivMoney” as shown in the picture. By Click that option, you can anytime activate or deactivate the facility.
Example for easy understanding
| Summary of Account Balance at the End of the Day | ||||
| Day | Particulars | SB Account / Current Account Balance | Fixed Deposit Balance | Total Balance Available |
| Day 1 | You have a balance of Rs.1 lakh in your account with the defined threshold (minimum amount to stay in your Savings account) of Rs.25, 000. At the end of the day, Rs. 75,000 is moved to an auto-created fixed deposit of 180 days at the prevailing rate of 7% | Opening balance1,00,000
End of the day 25,000 |
0
75,000-Dep 1 |
1,00,000
1,00,000 |
| Day 2 | Credited another Rs.25,000 in account | Opening Balance
25,000 End of day Balance 25, 000 |
75,000 – Dep1
25,000 – Dep2 |
1,25,000 |
| Day 17 | Cheque for Rs.40,000 presented in clearing | Opening Balance 25,000
End of day Balance 25,000 |
60,000-Dep1*
Dep2-liquidated* |
85,000 |
*Liquidated Dep2 for Rs.25, 000 and liquidated in part for Rs.15,000 from Dep1 to honor the cheque of Rs.40, 000 as breaking of FD is done in multiples of Rs.5,000. Dep2 will earn interest for 15 days at the applicable rate without penalty (on LIFO basis) as it exceeds 7 days which is minimum period required to be eligible for interest and Rs.15000 liquidated from Dep1 would earn eligible interest for 16 days.
Conclusion
While savings accounts may not offer the most lucrative returns compared to other investment options, they play a vital role in your overall financial strategy. By choosing the right bank and right schemes, you can increase your savings bank account interest and make your money work harder for you. Remember to choose the right bank, opt for high-yield accounts, and maintain a healthy balance, and you’ll see your savings account grow over time, providing a solid financial foundation for your future.
