Some banks, especially smaller or newer ones, pay a higher interest rate on your balances
Your salary, investments and loan EMIs, are all managed from the savings accounts you maintain with banks. But very few amongst us care to give serious thought to how much interest is paid for leaving your funds in the most common of bank accounts.
Smaller banks pay more
Money lying in our savings bank accounts fetches a nominal rate of interest. But some banks, especially smaller or newer ones, pay a higher interest rate on your balances. This is done to attract new business into banks that would be relatively small-sized or less known.
Large banks, both government-owned and from the private sector, give far lower interest rates to depositors. For instance, as per data provided to us by BankBazaar
, State Bank of India pays just 2.70 per cent interest. HDFC Bank pays about 3-3.5 per cent. Compared to those entities, the likes of AU Small Finance Bank pay 4-7 per cent interest; Ujjivan Small Finance Bank pays 4-6.5 per cent for its savings bank account holders. Remember: it’s okay to park your funds in a bank that pays you a little extra, but it’s always safer to keep your savings in banks that come with a long-term track record, good service standards and a wide branch and ATM network. Some private banks require maintenance of higher monthly or quarterly balances for giving higher interest rates.
First Published on Jul 3, 2020 09:56 am