AU offers Monthly Interest Payouts on Savings Account

Get faster access to your earnings with a monthly interest Savings Account from AU Small Finance Bank. Read this post to learn more.

A Savings Account is an excellent financial tool that allows us to deposit our savings and use them as and when required. But apart from this deposit and withdrawal flexibility, a Savings Account also helps you grow your savings. The balance you maintain in the account generates interest and works as an additional source of income.

AU Small Finance Bank offers monthly interest Savings Account to ensure customers can access their interest income at the earliest. Let’s try to learn more about this account-

Interest is any amount paid over and above the principal amount. For instance, when you take a loan, you're required to pay interest to the lender. Similarly, when you deposit money in a high-interest Savings Account, the bank offers interest on the balance you maintain in the account.

But why do banks offer interest on Savings Accounts?

Most banks use the big chunk of money you deposit in a Savings Account to offer loans to borrowers. In return, the borrowers pay interest to the bank. So, through the interest, banks reward the accountholders for letting them use their savings.

Banks decide the Savings Account interest rates based on several factors, including the current state of the overall economy and the internal finances of the bank. As a result, the interest rates can significantly vary between banks.

AU Small Finance Bank currently offers one of the highest Savings Account interest rates to help customers make the most of their savings.

According to RBI guidelines, banks must calculate the interest on a Savings Account based on the daily closing balance. While the calculation is done daily, many banks generally deposit the interest income in the account quarterly or half-yearly.

The formula used for the same is as follows-

For instance, if a bank offers a Savings Account interest rate of 3.50% p.a. with half-yearly payouts and the average balance maintained is INR 90,000, here’s how it’ll be calculated-

Savings Account Interest= (90,000) * (180 days)* (3.5/100)/365 = INR

So, the bank will deposit interest of INR 1,554 into the account after 6 months if the same balance is maintained throughout the period.

With a Savings Account with a monthly interest payout, the interest income is deposited into the account every month. This ensures you don’t have to wait for 3 to 6 months to receive the interest.

Up until now, most Term Deposits like FDs used to come with a monthly interest payout facility. However, AU Small Finance Bank has launched this facility for Savings Accounts as well.

Read More: Monthly Interest Payout on Savings Account

How is the Monthly Interest Rate Calculated on Savings Account?

The monthly interest is also calculated with the same formula discussed above however, the minimum tenure for a Monthly Interest Payout is 3 months. If we take the same example, here’s how the calculation will work out-

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

So, at the end of the 1^st month, the bank will credit INR 259 to the account.

Another significant advantage of a Savings Account with monthly interest is compounding. For instance, in the 2^nd month, the opening balance in the account will be INR 90,259 including the interest from the first month.

As a result, the interest income for the 2^nd month will be INR 260.

AU Small Finance Bank, the largest Small Finance Bank in India with 1,000+ touchpoints across the country, offers many different types of Savings Accounts with a monthly interest payout facility.

Apply for an AU Savings Account online or offline to start generating additional returns on your savings every month.