Author
LoansJagat Team
Read Time
4 Min
27 Jun 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.
You might know that interest rates on your savings accounts vary a lot. The following is a quick comparison:
Bank Type | Interest Rate (Approx.) | Interest on ₹1,00,000 (1 year) |
Large Traditional Bank | 3% | ₹3,000 |
Small Finance Bank | 7% | ₹7,000 |
You can see that simply by choosing the right bank you can earn over twice the return for the same amount.
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.
Balance Slab | Rate | Interest on ₹2,00,000 |
₹10,000 to ₹50,000 | 3% | ₹6,000 per year |
₹1,00,000 to ₹2,00,000 | 6.5% | ₹13,000 per year |
If your account generally holds over ₹1,00,000 then check with your bank if you are getting a slab-based rate.
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:
Amount | Interest Rate | Interest Earned |
₹25,000 (Savings) | 3% | ₹750 |
₹55,000 (FD) | 7.5% | ₹4,125 |
Total | - | ₹4,875 |
Earning ₹4,875 is better than earning ₹2,400 if she had let all her ₹80,000 sit in a basic savings account.
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.
Investment Option | Duration | Interest Rate (Approx.) | Returns on ₹50,000 |
Short-Term FD | 3 months | 6.5% | ₹50,812 |
Recurring Deposit | 12 months | 7.25% | ₹53,731 |
You can also explore other safe investment products that give you decent interest with low risk:
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.
Payout Frequency | Returns on ₹2,00,000 at 7% interest |
Yearly (compounded) | ₹14,000 after 1 year |
Monthly payout | ₹1,167 per month |
This option generally suits retirees or homemakers who need regular income.
There are some banks that provide better rates for joint accounts or accounts opened for senior citizens and minors.
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:
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.
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.
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:
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.
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.
About the Author
LoansJagat Team
We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?
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