Seven banks have cut: Here are best interest rates offered by banks for your deposits

Key Highlights: 

• Seven banks revised savings interest rates
• Savings interest rates getting lower for the first time in six years
• Savings account interest rates at lowest at 3.50%

When an individual is left with a lump sum money, banks is the safest place they feel to park that amount. A savings account is considered as one of the simplest form of account where an individual can store in their money and earn interest over it. 

For an individual the higher the interest rate on savings account the better it is for them. Savings accounts are best suited for salaried employees or people with a monthly income. 

However, at present major banks are undergoing downward revision in their savings account interest rates. 

It all started with State Bank of India on July 31, 2017 – who announced a two tier interest rates on savings account. A person with SBI savings account balance of Rs 1 crore will continue to earn interest rates at 4% per annum while a person holding balance below Rs 1 crore will only earn interest rate of 3.5% per annum.

SBI group has saving deposits of Rs 9.4 lakh crore – 90% is below Rs 1 crore accounts which would now be getting interest rate of 3.5% per annum.

Since then other banks like Axis Bank, HDFC Bank, Yes Bank, Karnataka Bank, Bank of Baroda and Indian Bank have also followed between 25 basis points – 100 basis points revision in their different savings balance amount. 

Savings account interest rate now has come as lower to 3.50% for the first time in six years. 

Banks from October 25, 2011, are free to determine their savings bank deposit rates for resident Indians only. Since then, banks have mostly increased the rates on savings account, while none reduced until now. 

Bringing savings account interest down was an outcome of large inflows in savings and current accounts during the demonetisation period between November – December 2016, as per SBI.

Bank of America Merrill said, “If a good part of deposits accrued on account of demonetization moves out over the following 3-6 months, banks will tend to either raise lending rates or alternatively cut deposit rates further. This is because we expected banks to focus on profitability in contrast to volumes. ”

As per BankBazaar, savings bank accounts generally offer an interest rate slightly higher than the rate of inflation, in order to keep the real value of money stable throughout the years. They offer an excellent amount (if not as much as current accounts) of liquidity of funds.

These accounts are also feature packed and offer quick links to pay bills, make quick transactions, etc. to the account holder as soon as he / she logs in to the account.

There are a few different types of savings accounts available currently. 

Regular Savings Account

Such account do not see regular deposits of consistent amounts, nor do they see regular withdrawals. These are  primarily the virtual equivalent of a safe where the money just sits waiting to be used by the account holder. 

Salary Based Savings Account

It is most often opened by banks on the request of large companies that require a payment disbursal solution. Banks offer companies preferential rates and specific terms for these accounts – which will be individually handled by each of the latter’s employees.

Savings Accounts for Children and Minors

This account functions in the same basic way as regular savings accounts. They are developed  to educate the younger generation about modern day banking, facilities, and the general nuances of dealing with a savings account in a bank. 

Zero Balance Savings Account

This has emerged as best features of a savings account and a current account. Even though there is withdrawal limits, yet these accounts are not charged any penalties if the balance in the account falls below the prescribed minimum. 

Not worry, if you want to open an savings there are still other banks who provide with highest interest rates. 

RBL Bank provides the highest interest rate of 7.1% on savings account above Rs 10 lakh balance. Lakshmi Vilas Bank, Kotak Mahindra Bank, IndusInd Bank and UCO Bank also provide savings account interest rate of over 6% per annum. 

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