- Saturday, April 27, 2024
By: Admin Super
Savings accounts offer instant liquidity as well as capital appreciation over the period. However, compared to other investment opportunities, they offer lower interest rates. On the other hand, high-interest savings accounts are known for better returns and are a safe place to park your money for long-term and short terms. Compared to regular savings accounts, a high-interest savings account can offer considerably better savings account interest for your money to grow.
With higher savings account interest rates, you can build a significant pool of savings in less time and enjoy various banking services at the same time. However, it is a common question, how much can you earn with a high-interest savings account? Let us find the answer in the article below.
What is a high-interest savings account?
Before understanding a high-interest savings account, you must know what a savings account is first. Banks and financial institutions offer savings bank accounts where you can deposit your money, and the bank pays savings account interest on your funds. The money deposited in a savings account is highly liquid, and you can use it for daily expenses as well. The interest rates in savings accounts are determined on the daily closing balance to make the calculation even and streamlined.
A high-interest savings account works like a normal savings account but offers considerably higher interest rates on deposits. One of the best examples of high-interest savings accounts is the IDFC FIRST Bank savings account. It offers the industry’s highest savings account interest rates with an option of monthly interest payout to amplify your savings. Additionally, you can enjoy over 25 banking services with zero fees.
How much does a high-interest savings account yield?
The returns on high-interest savings accounts depend on several factors, including your deposits, interest offered, and the duration for which you keep your money in the account. Withdrawal and frequent transactions are other factors that affect your yield in a savings account since the interest is calculated on the daily closing balance and paid quarterly or monthly, depending on the account type you opt for.
You can use a savings account interest calculator to determine the precise returns in your savings accounts during a specific period. These interest calculators are available online, and you simply need to enter your balances and interest rates to get the returns. Among various online tools, IDFC FIRST Bank offers an easy-to-use and robust savings account interest calculator that can help you determine your returns.
For manually determining your interests, you can use the following formula:
Interest on savings account= Daily balance*Rate of interest* (No. of days/365)
How to maximise your earnings in the bank account?
Since savings account also serve the purpose of meeting your daily expenses, holding liquid money is necessary. However, it is quite difficult for many individuals. To increase your earnings , you first need to find a savings account that offers the highest interest rates. Once done, you can proceed with looking for account maintenance charges and services charges. The lower the charges, the better yield you can ensure. Other actions that you must take include minimising withdrawals and online transactions to maintain adequate balances for considerable gains.
A high-interest savings account can be an effective alternative to FDs since fixed deposits freeze your money for a set duration. However, to get decent returns, you must choose banks offering high-interest rates and low banking service fees.
