6 banks offer up to 8% interest rates on savings accounts; check full list here (2024)

Storing a portion of your extra income in savings accounts offers numerous advantages, particularly in times of uncertainty like the present:

Emergency fund: A sufficient emergency reserve kept in a savings account serves as a financial safety net for unforeseen costs such as job loss, medical emergencies, or sudden repairs. Strive to accumulate at least three to six months’ worth of living expenses in an easily accessible account.

Ease of access: Savings accounts provide convenient access to your funds through ATMs, online transfers, or debit cards. This enables you to address immediate financial requirements without resorting to tapping into investments or seeking loans.

Interest earnings: Although interest rates on savings accounts might not be as substantial as those offered by other investment avenues, they still facilitate gradual growth for your money, acting as a safeguard against the impact of inflation over time.

Peace of mind: Having a financial cushion in place can mitigate stress and anxiety in times of uncertainty. It enables you to make decisions calmly and confidently, assured that you possess the resources to confront challenges.

After the Reserve Bank of India (RBI) decided to hike the repo rate, there has been a notable transformation in the realm of savings account interest rates in India. Smaller private banks and small finance banks have taken the lead, providing interest rates reaching up to eight per cent, in contrast to the comparatively modest rates offered by major private banks. Some of them include:

DCB Bank: This bank provides interest rates of up to eight per cent on savings accounts, making it the top choice among private banks in terms of interest rates. The minimum balance requirement ranges from ₹2,500 to ₹5,000.

Ujjivan Small Finance Bank: This bank provides competitive interest rates for savings accounts, reaching up to 7.50 per cent for specific balance tiers. This positions them as a leading choice among small finance banks in terms of interest rates.

Federal Bank: This bank is presenting a competitive interest rate of up to 7.15 per cent on savings accounts. While Ujjivan SFB offers a slightly higher maximum interest rate, it comes with a higher minimum balance requirement. Therefore, if you can uphold a minimum balance of ₹5,000, Federal Bank might be a favourable choice for you.

DBS Bank: This bank offers an appealing interest rate of up to seven per cent on savings accounts, positioning it as a formidable player among foreign banks in India. This interest rate applies to specific balance ranges, potentially surpassing rates offered by other foreign banks in the country. The tiered system incentivizes saving by providing better rates for higher balances. However, the average quarterly balance requirement of ₹10,000 to ₹25,000 might pose a challenge for some individuals.

AU Small Finance Bank, Equitas Small Finance Bank, and Suryoday Small Finance Bank: These banks provide enticing interest rates of up to seven per cent on their savings accounts, presenting appealing choices for individuals looking for attractive returns on their savings. Naturally, each bank has a distinct minimum monthly balance requirement.

AU Small Finance Bank necessitates customers to uphold a monthly balance between ₹2,000 and ₹5,000, Equitas Small Finance Bank mandates a minimum balance of ₹2,500 to ₹10,000, and Suryoday Small Finance Bank allows its customers to maintain a minimum of ₹2,000 in their accounts.

IDFC First Bank and RBL Bank: Both of these banks present competitive interest rates, reaching up to seven per cent on savings accounts. They extend this rate to balances exceeding ₹1 lakh, along with complimentary transactions for essential services such as NEFT, RTGS, and cheque issuance. Additionally, these banks provide a diverse array of financial products, including loans, investments, and insurance.

Smaller private banks and small finance banks (SFBs) are, indeed, providing notably higher interest rates on savings accounts when compared to larger institutions in the banking sector. This shift is influenced by various factors:

• Intense competition for acquiring new customers
• Reduced funding expenses
• Emphasis on targeted market segments
• Regulatory conditions

While the appeal of elevated interest rates on savings accounts is undeniable, it’s essential not to make them the exclusive determinant when selecting a bank. Adopting a comprehensive approach and taking into account other factors that contribute to a secure and convenient banking experience is crucial.

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Published: 21 Dec 2023, 11:22 AM IST