Best Saving Account Interest Rates for You

For beginners, a Savings Account is a basic form of investment. A regular habit of savings is essential to build a sizeable corpus for your future goals and is also helpful during emergencies. Often, while opening a Savings Account, many of us are concerned about the safety of funds & other benefits, but very few of us are interested in knowing the interest rate because of the fact that many banks offer low rates of interest on Savings Accounts. It is advisable to be aware of the interest earnings from the bank account to know how much return you have gained from the deposited amount.

To invest in the best Savings Account interest rate, here’s what you should know about Savings Account Interest.

Interest on a Savings Account represents the amount of money the bank pays to a depositor for depositing funds in the bank account. 

Simple interest is calculated using only your principal balance or original balance present in your Savings Account. The simple interest formula is as follows:

A = P (1 + rt)

A = final amount

P = initial principal amount

R = annual interest rate

t = time (in years)

On the other hand, compound interest is the interest earned on the interest. Once you earn interest on your principal amount, the previously generated interest also earns interest. This is known as compounding, and below is the formula: 

A = P (1 + (r/n)) ^ nt

Where,

A = final amount you will receive

P = the initial principal amount

r = rate of interest

n = number of times interest is applied

t = time passed (in years)

As per the RBI regulation, the interest rate on a Savings Account is calculated daily basis the closing balance in the bank account. The bank will credit the interest income on a yearly, quarterly or monthly basis, depending on the type of Savings Account you hold.

For instance, at AU Small Finance Bank, AU Savings Account holders can receive Monthly Interest Payout to ensure steady cash flow. Below is the formula for Savings Account Interest Rate Calculation:

Interest = Daily balance * (Number of Days) * Interest / (Days in a Year).

Here’s an example of how the interest on the Savings Account is calculated.

Let’s assume that you open an instant online Savings Account that offers a monthly interest payout with an interest rate of 3.50% p.a. If, for the first month (30 days), you maintain a balance of INR 90,000, here’s how the interest will be calculated-

Savings Account Interest = 90,000 *30 * (3.5%/100) / 365 = INR 259

Read More: How to Calculate Interest on a Savings Account?

Typically, the interest rate on the Savings Account offered by numerous banks is usually low, ranging from 2.70% p.a. to 5% p.a. But if you are looking to earn high interest on your savings, you can open an AU Savings Account with AU Small Finance Bank, the largest Small Finance Bank (SFB) in India that offers higher interest rate. In addition, the bank offers high Savings Account interest rates & the advantage of Monthly Interest Payout.

Apply now.

Read More: 4 Ways to Earn More Interest through Savings Account

The interest rate on Savings Account is taxable as per the tax slab rates. Under Section 80TTA of the Income Tax Act, interest income up to INR 10,000 earned from all Savings Accounts is tax-free. If the interest income exceeds the prescribed limit, the extra amount comes under taxation.

Tax Deducted at Source (TDS) is not applicable on interest earned from Savings Account. This type of tax is only applicable for NRO Savings Accounts at the rate of 30% and not on NRE Savings Accounts.

AU Small Finance Bank offers various types of Savings Accounts to meet different customer needs. To select the best Savings Account interest rate, you must assess your needs, interest rates, minimum balance criteria, online accessibility, and offers.

Any individual can open a Savings Account online via AU 0101 App or AU Video Banking. All you need is your PAN Card, Aadhar Card & Passport size photograph.

You can also visit our bank branch or call on customer care number 1800-1200-1200 for Savings Account opening.

Sources:

https://www.bankbazaar.com/savings-account/savings-account-interest-rates.html

https://www.idfcfirstbank.com/finfirst-blogs/savings-account/what-is-compound-interest#:~:text=Compound%20interest%20is%20essentially%20a,your%20savings%20account%20or%20deposit

https://www.bankbazaar.com/savings-account/banks-with-highest-savings-account-interest-rates-in-india.html

*T&C Apply. Rates are subject to change at the sole discretion of AU Small Finance Bank.