How To Earn More Interest On Your Savings In 2025?

Nidhi and Ronak both had ₹5,00,000 in their savings accounts. Nidhi kept hers in a standard account earning 3% per year. But Ronak shifted his funds to a high-interest savings account offering 7%.

After one year, Ronak had ₹20,000 more. Now you must be wondering what the difference is. The only difference is that Ronak made a better choice. Most of us open a savings account for safety and convenience, but only a few make the most of it.

If you think that just letting your money sit idle in a regular account will build your wealth, then you are wrong. With a bit of planning, you can earn significantly higher interest with minimal effort and risk.

1. Pick A Savings Account With Higher Interest

You might know that interest rates on your savings accounts vary a lot. The following is a quick comparison:

You can see that simply by choosing the right bank you can earn over twice the return for the same amount.

2. Keep A Higher Average Balance 

Many banks are offering interest based on slabs. If your balance falls within a higher slab, you earn a better rate. For this you do not need to move banks, you just need to maintain the right average.

Example: 

If your account generally holds over ₹1,00,000 then check with your bank if you are getting a slab-based rate.

3. Use The Sweep-In Facility

This feature links your savings account with a fixed deposit. When your balance crosses a set limit (like ₹25,000), the extra money is moved to a fixed deposit. This earns a much higher rate, typically 6.5% to 7.5%.

Namrata’s case:

• ₹25,000 stays in savings at 3%
• ₹55,000 (extra) moves to FD at 7.5%

Total earnings after 1 year:

Earning ₹4,875 is better than earning ₹2,400 if she had let all her ₹80,000 sit in a basic savings account.

4. Invest Idle Funds In Short-Term Deposits

If you don’t need certain funds for a few months, move them to short-term fixed deposits or recurring deposits. As they offer better returns than a savings account and come with low risk.

5. Use Government And Bank-Backed Low-Risk Options

You can also explore other safe investment products that give you decent interest with low risk:

• Monthly Income Scheme (POMIS)
• Money-back life insurance plans
• Capital-protected mutual funds
• Government bonds

6. Opt For Regular Interest Payouts (If Needed)

If you rely on monthly income then you can go for accounts or deposits that offer monthly or quarterly payouts instead of compounding interest annually. It will improve your cash flow.

Example:

This option generally suits retirees or homemakers who need regular income.

7. Consider Joint, Minor Or Senior Citizen Accounts

There are some banks that provide better rates for joint accounts or accounts opened for senior citizens and minors.

For example:

• Senior citizen accounts may offer 7.25%
• Minor accounts may offer 6.75%
• Standard accounts may only offer 3.5%

8. Try Digital-Only Accounts For Better Returns

Various banks nowadays offer app-based or digital savings accounts with better rates than branch-based accounts. Such accounts come with minimal paperwork and instant account setup.

They also offer:

• Cashback on transactions
• Auto-saving tools
• Budgeting features

9. Don’t Stick With The Same Bank Forever

If your current bank offers low returns, don’t hesitate to switch. You can compare interest rates easily now. Various websites such as official bank sites and aggregators list the latest interest slabs.

Even if you shift to a bank with 3% more interest on ₹2,00,000 can earn you ₹6,000 extra annually.

10. Watch Out For Tax On Interest Income

If your interest earned from savings accounts is above ₹10,000 in a financial year then it is taxable. If you are a senior citizen then the limit is ₹50,000. 

So, if your total income is below the taxable limit, submit Form 15G or 15H to prevent TDS deductions.

Final Thoughts

If you think that you need to give up your comfort to save smartly then you are wrong. It is all about making your money work harder. You can see real results by following simple actions like:

• Picking a better savings account
• Activating the sweep-in facility
• Shifting idle money to short-term deposits
• Comparing interest rates

Ronak did not earn more by luck, he made better choices. So can you. Start by taking small steps. Over time, these steps can grow your savings without you having to save more from your pocket.

FAQs

1. How many savings accounts can I have?

There is no legal limit, but managing them responsibly is important.

2. Can I earn monthly interest from savings accounts?

Some accounts and FDs offer monthly payouts.

3. Can I shift my account to another bank easily?

Yes, account opening and closure are now simpler with online KYC.

4. Is a sweep-in facility available in all banks?

No, only select banks offer this feature.

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