Why having a High Interest Savings Account is Beneficial?
However, a high interest savings account offers higher interest than a conventional savings account.
studio18 Last Updated:August 08, 2023 13:36:21 IST
A high-yield savings account is not just about parking your money in a safe place. A high interest rate offered with such an account can help you grow your wealth faster than the conventional savings account. You get the perks and stability of a savings account along with higher interest for enhanced returns. These accounts are especially useful for creating emergency funds while working towards a specific financial goal. Let us understand why high interest savings accounts are beneficial and how you can apply for them.
Workings of a high interest savings account
A high interest savings account works similar to a conventional savings account where interest is calculated on the daily closing balance and credited at a fixed interval (quarterly, half-yearly, or annually). Indian banks normally offer interest pay-out at a quarterly interval.
However, a high interest savings account offers higher interest than a conventional savings account. This feature makes such an account exclusive and useful for varied individuals. Along with considerably higher returns, IDFC FIRST Bank also offers a monthly interest credit where you receive your accrued interest at the end of every month.
Benefits of high interest savings account
Savings accounts provide a stable and safer venue for stashing your money where it grows over a period of time with interest earnings. But with a high interest savings account, such as those offered by IDFC FIRST Bank, you can build considerable wealth in a shorter duration. Key benefits of high interest savings accounts are –
Compounding effect – The funds deposited in a high interest savings account earn interest daily. It means that the savings account interest rate is calculated on a daily basis and deposited at a specific interval. The interest gets compounded after every interval, offering higher returns. The monthly pay-out from IDFC FIRST Bank makes compounding more frequent, thus providing enhanced returns. Safer option for parking money – High interest savings accounts offer guaranteed returns and thus provide a safer venue to park your money. The interest rates may revise depending on the economic situation in the country and RBI’s repo rates. However, with a growing economy and post-pandemic recovery, the rates are likely to increase in the future. IDFC FIRST Bank offers up to a 7% interest rate on savings accounts which is higher than a conventional savings account. Liquidity – Unlike FDs, where the deposits are frozen for the entire tenure, the money in a high-yield savings account is accessible anytime, anywhere. Using net banking and mobile banking, you can have access to your funds round-the-clock even during public and bank holidays. Pay utility bills – You can use a high interest savings account to pay utility bills on the go. The IDFC FIRST Bank mobile app offers an integrated facility to pay all your utility bills in one place. You can set up a standing instruction and use the autopay facility for all your regular payments. Access to a variety of banking services – With a high-yield savings account, you also get access to numerous banking services such as online fund transfers, cheque payment facilities, debit cards, and funding other investments such as fixed deposits and mutual funds. Depending on the bank, you may need to pay a nominal charge, but IDFC FIRST Bank offers the ‘Zero-Fee Banking’ facility* on 28 commonly used savings account services including ATM withdrawals, money transfers at branches and via net banking, third-party cash deposits, and more. Zero Fee Banking is available on savings accounts with ₹10K AMB (Average Monthly Balance) and Rs. 25K AMB subject to the maintenance of average monthly balance in the account.
A high interest savings account can help you meet your daily financial requirements and grow your money quickly with better rates. However, when opening a high interest savings account, go through the terms and conditions, and the banking service charges. With zero-fee banking and a monthly interest credit, an IDFC FIRST Bank savings account is the most suitable option if you are looking for a high-yield savings account. Explore more!
*IDFC FIRST Bank offers Zero Fee Banking on Rs. 10,000 Average Monthly Balance (AMB) Savings Account and higher account variants, subject to maintenance of AMB in the account.These services are being offered free in good faith, and in case of abuse, the bank reserves the right to charge fees as per market norms. All rights reserved.
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