How To Earn More Interest On Your Savings ?

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.

Read More - How to Calculate Interest?
 

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:

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• ₹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.

12 months

7.25%

₹53,731

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.