How to get more return from your savings accounts

Savings accounts are one of the most popular choices for investors of all ages and risk profiles. It is immune to market fluctuations and also gives interest on the money parked in it. Unfortunately, the returns from a savings account are much lower compared to other investment options. But it is possible to increase your income savings accounts by following the tips below:

Try out certificates of deposit

One of the best ways to get the most out of your savings bank account is to invest in certificates of deposit. It is a negotiable instrument that guarantees the repayment of the principal and fixed interest. The interest rate is decided by the issuer. 

Certificates of deposit can be issued by scheduled commercial banks and financial institutions in India. The maturity ranges from seven days to one year. You can demand the repayment prior to the expiry of the maturity. Apart from the fixed interest rate, certificates of deposit can be issued on a floating rate basis which is reset periodically. 

You are also free to reinvest the proceeds of a matured certificate of deposit and increase your earnings. 

Check if you are eligible for demographic-specific accounts

You can check if you are eligible to open specific savings accounts targeted at senior citizens, women, children, etc. Typically, these accounts offer a better interest rate compared to regular saving accounts.  By opening such accounts, you will be eligible to earn more interest on your deposits and maximize your savings. 

Make sure to choose your account wisely. Certain accounts may do away with the requirement of maintaining a minimum balance if you replace it with a fixed deposit of an equivalent amount. 

Try out the sweep-in facility

Sweep-in refers to an auto-debit facility that is available in your savings account. When the deposit in your account exceeds a certain limit, the amount gets auto deducted and converted into a fixed deposit.  So instead of letting your funds sit idly in your savings account, you can convert the funds into a fixed deposit and earn interest on the amount.

In case you are in need of urgent money, you can liquidate the fixed deposit. The bank can also liquidate them if the balance in your savings account is lesser than the minimum balance requirement.  

Interest credits can also help

monthly interest credits on your savings bank account can be useful if you are looking to increase your savings. Once you maintain the required balance in your savings account, you can use the monthly interest credit for investment too, through SIPs in mutual funds. This will ensure that your interest income is utilized and provides you with higher returns. Make sure to only invest in actively managed funds that are performing well and suited to your risk profile. 

If you are unsure about how to choose the right mutual fund for you, get in touch with the experts at Moneyfront, who can help you pick the right one. When it comes to investment, it is always wiser to play it safe than to simply park your funds where everyone is investing. So choose carefully. 

Opt for a high-interest account

This may seem like a no-brainer but very often, people continue to maintain their savings accounts with banks that do not offer very high-interest rates. If you feel that the interest you are earning is not enough, check out the other options available in the market and switch your savings account to such a bank or financial institution. This will help you earn a higher interest income.

At the same time, be wary of banks that impose additional charges on your deposit. This can bring down your interest income and leave you worse off. Do your diligence and compare all options available before making a final call. 

Make recurring deposits 

A risk-free and guaranteed way to earn from your savings account deposit is through a recurring deposit. You can decide how much you want to set aside every month and provide auto-debit instructions on your account. You also get to decide the tenure of investment. Upon maturity, you have the option of receiving the interest and principal amount right into your savings account. You can also continue rolling over the savings made. 

Recurring deposits are a great option as you can liquidate them whenever you need them. You can use them to hit short-term financial goals. 

Which is the best option for you?

All the options discussed above have the potential to maximize your returns from your savings account. The right pick for you depends on various factors, including your profile, needs, and end results. 

For instance, shifting your account to another bank may seem like a walk in the park, but if the new bank imposes additional fees, you may end up with a lesser amount in your savings account than what you had started with. Similarly, demographic-based accounts that pay a higher interest may not always be available to you. 

So spend some time doing your research and finding out which of the above options works best for you. 

Bottom line

Earning more interest from your savings account is always welcome as that increases your overall earnings. The options shared above are extremely low risk but can reward you with additional income in your account. In any case, make savings your top priority so you know that you can sail through a rainy day without being at your wit’s end.