Savings Account

Banking

A savings account provides safe storage with interest (2.5-7% per annum). Entry point for all banking. Interest above Rs 10,000/year is taxable. Sweep FD feature earns higher rate while maintaining liquidity.

In detail

Rates (2024): SBI 2.7%, HDFC 3%, Kotak 3.5-4%, IndusInd 5-6%, AU/Equitas SFB 5-7%. Deposits up to Rs 5L insured by DICGC per bank. Sweep FD: excess balance auto-transfers to FD earning higher rate.

Formula

Annual interest = Average monthly balance x Annual rate / 100

Real-life example

🇮🇳 India example

Preeti switches Rs 50,000 from SBI savings (2.7% = Rs 1,350/year) to AU Small Finance Bank (7% = Rs 3,500/year). Rs 2,150 extra for zero effort. Both DICGC insured.

Frequently asked questions

Safe to keep more than Rs 5L in one bank? ▼

DICGC covers only Rs 5L per bank (all accounts combined). For amounts above Rs 5L: spread across banks or use liquid funds (safe, better returns).