Developing a habit of saving your hard-earned money is a wise financial practice. Keeping aside a portion of your disposable income becomes crucial in a world where expenses continuously increase. However, with numerous options available, you can get confused. In such times, you should open a Savings Account. It is an interest-bearing banking facility that holds funds you do not plan on spending immediately.
It helps you earn through interest rates once you start depositing. Knowing the interest rate structure and the factors that influence it is essential. So, here is a guide that covers these aspects.
Why do banks offer interest rates on Savings Accounts?
Upon opening a Savings Account, you establish a deal with your banking partner. Once you start depositing money regularly, the bank can lend this sum to other customers through Loans. This way, you indirectly help the bank in fulfilling its ventures. However, banks do not take this help for granted. They provide interest rates on your Savings Account. As a result, you yield interest earnings whenever you deposit funds.
How to compare interest rates?
Here is how you can compare Savings Account interest rates:
- Comparison tools online
Use online financial comparison platforms or tools like a Savings Account calculator. These tools aggregate Savings Account interest rates from various banks. They provide a quick and convenient way to help you see a simultaneous comparison of rates. This way, you can narrow down your options efficiently.
- Bank websites
Visit the official websites of different banks to access information about their Savings Account interest rates. Banks often list their rates on their websites, making it easy for you to compare their offerings.
- Financial apps
Many mobile apps are designed to help users manage their finances and compare different financial products. These apps often include specific features that let you compare interest rates and services. This makes your decision-making process more streamlined.
- Visit local bank branches
If you prefer a personalised approach, visit local bank branches and enquire about their Savings Account interest rates.
Can you enjoy higher interest rates on your Savings Account?
The following are the ways to enjoy better Savings Account interest rates:
- Use your idle funds
A Savings Account offers you sweep-in and sweep-out facilities. Through such facilities, your idle funds get swept out to a Fixed Deposit income that yields a relatively higher interest rate.
- Consider certificate deposits
Consider using your account to invest in Certificate Deposits. Such Deposits are like FDs. By investing in these CDs, you increase your interest earnings substantially.
- Opt for a criteria-based Savings Account
Some banks offer a high-interest Savings Account facility to their customers. Such accounts offer relatively better interest rates than standard Savings Accounts. However, they also have criteria when you open a Savings Account like a higher minimum balance requirement and specific limitations on card transactions.