Bandhan Bank and IDFC First Bank offer the best rates on savings accounts

Most salaried individuals manage multiple savings accounts. One savings account is linked to salary deposits and investments, while others are is used pay loan instalments, credit card dues, manage monthly expenses, etc.

Savings bank accounts generally carry lower interest rates compared to those on fixed deposits.

There are some small and new private banks that offer higher interest on savings accounts compared to leading private banks. It’s important to give some serious thought on how much interest is paid by banks for leaving your funds in the savings account.

Newer private banks offer higher interest rates

Amid falling interest rates there are two new private banks offering higher than 7 per cent interest on savings account as per data compiled by BankBazaar. These banks are Bandhan Bank and IDFC First Bank offering interest rates of up to 7.15 per cent and 7 per cent, respectively on their savings accounts.

Other private banks offer interest of up to 6.75 per cent. The interest rates are comparable with those offered by small finance banks. For instance, AU Small Finance Bank and Ujjivan Small Finance Bank offer interest rates of up to 7 per cent and 6.5 per cent, respectively.

These interest rates are higher compared to leading private and large public sector banks. For instance, HDFC Bank and ICICI Bank offer 3 per cent to 3.5 per cent interest, the State Bank of India (SBI) and Bank of Baroda offer 2.70 per cent and 2.75 per cent interest respectively on their savings account.

Also read: Do not just go by high interest while shifting banks; look at new bank’s services: RBL Bank

Minimum balance requirements are higher

The minimum balance requirement in savings accounts of private banks starts from Rs 500 and it goes up to Rs 10,000. This is kept higher by the banks compared to public sector banks because they are more interested in reaching out to the salaried middle class and self-employed professionals with their services. At IDFC First Bank and Bandhan Bank, the minimum balance requirement is Rs 10,000 and Rs 5,000 respectively. At leading private banks such as Axis Bank and HDFC Bank, the minimum balance requirement is Rs 2,500 to Rs 10,000.

Choose a bank with a long-term track record, good service standards, wide branch network and ATM services across cities; a higher interest on savings accounts would be a bonus.

A note about the table

Interest rate on savings account for all BSE listed public sector banks and private banks are considered for data compilation. Banks whose websites don't advertise the data are not considered. Minimum balance requirement for regular savings account and excluding basic savings bank deposit (BSBD) account are considered.