Savings Account is a must-have for every financial portfolio. The account is an interest-generating deposit account. It is ideal for anyone with a goal to grow savings and enjoy transaction flexibility. There is no lock-in period or tenure associated with Savings Account. You can instantly access funds by making an ATM withdrawal or an online transaction. However, there is a minimum balance you should maintain to avoid penalties.
Having a clear idea about Savings Account interest rates is necessary. It helps you save more and achieve your financial goals easily. Let us understand how the interest rates get calculated.
How is the Savings Account interest rate determined?
The interest rates depend on two key factors: banks and account balance. The interest rate varies for each bank. Exploring the market and comparing all options is crucial for this purpose. When it comes to account balance, a higher Savings Account deposit attracts a higher interest rate. Generally, an interest rate of 3.25% is offered on a bank balance worth Rs. 1 lakh. The interest rate increases as you deposit a higher amount than the given slab amount.
However, the hiked interest rate applies only to the incremental amount. Almost all banks consider the closing day balance to calculate your Savings Account interest rates. The bank usually rounds off the interest income to the nearest rupee. The rates are directly credited to your account every quarter or as decided by the bank. Since the rates keep changing, keep an eye on the bank’s website to stay updated with the latest ones.
Interest rate calculator
An online Bank Account interest calculator is a tool that helps you find out your interest earnings. Doing manual calculations can be tedious and time-consuming. This is when the online calculator comes to your rescue. Make use of the interest calculator when opening the account online. Here is how the calculator helps:
- Investment goal: Use the tool to calculate to plan your investment, be it short and long-term financial goals. Access your financial plans and determine the exact amount you need to meet your financial goal.
- Present investments: The calculator also considers your current investments to determine a suitable monthly investment amount.
- Investment expectations: Input the interest rates you expect your investments to achieve. You also need to set the timeline for the investment goal.
Once you have entered the mentioned parameters in the interest calculator, the tool computes a suitable deposit amount you should maintain monthly to gain the desired returns. You could also use the interest calculator on the Banking apps.