This is done to attract new customers to the banks
Did you know that there are banks offering 7 per cent on savings bank accounts? Your salary, investments and loan EMIs, are all managed from the savings accounts you maintain with banks. It may pay to give some serious thought to how much interest is paid for leaving your funds in the most common of bank accounts.
Smaller private banks pay more
IDFC First, Bandhan and IndusInd offer up to 7 per cent on their savings account. 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.
As per data compiled by BankBazaar, eight out of 10 banks are smaller, private entities. The remaining two are small finance banks offering higher interest rate on your balances. This is done to attract new customers to the banks.
Large banks, both government-owned and from the private sector are giving far lower interest rates to the savings account holders. For instance, State Bank of India and Bank of Baroda pays just 2.70 per cent interest and 2.75-3 per cent interest respectively. HDFC Bank, ICICI Bank pays about 3-3.5 per cent and Axis Bank pays 3-4 per cent interest. Compared to these large 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.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.