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How can you benefit from high interest rate savings account?

Why do you need to dishoard liquid cash?

We all must know the dangers of keeping money idle. It may evaporate quickly owing to surging inflation or on days when you feel spendthrift. You can instead invest the idle money in a bank account where you would earn interest on it. Banks offer you various investing schemes like a savings account, a fixed deposit and a recurring deposit to keep your money.
Features of a savings account

A savings account is generally opened by people who have a fixed income. The aim of this scheme is to inculcate a habit of saving money. Some banks even allow you to open a savings account with a minimal deposit of Rs100 with current savings interest rates in India varying from 4% to 6%.

A savings account can be divided into a regular savings account and a high interest savings account. A high interest rate savings account is a variation of the regular savings account that banks offer. Quite naturally, a high interest account earns a higher rate of interest than a regular savings account, in return of which the bank may ask you for a large minimum opening deposit. You may also be charged if your balance falls below the threshold amount required by the bank. The account may also be subject to other conditions depending upon the bank.
The recent launch of differentiated banks in India, has seen interest rates on saving accounts experience aggressive pricing. The newly formed payment banks that only offer savings account schemes offer high interest rates in the range of 6% – 7%.
Currently, the fixed deposit rates are seeing a decline, thus making high interest rate savings schemes more attractive.

Advantages of having a savings account

1. Encourages a habit of saving – For people earning fixed salaries, it encourages a habit of saving money.

2. Earning interest- You earn interest on the amount you have deposited.

3. Making payments – You can make payments or transfer money from your savings account via cheques or online banking.

4. Liquidity- Unlike fixed deposits, savings account schemes ensures that you can access your funds whenever you need.

5. Proof of identity – The savings account passbook gives you a proof of identity.

6. Low risk instrument- Savings account are very low risk instruments, where you do not have to worry about losing your money.

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