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What is a Savings Account?

A savings account is a bank account that has become a must-have for every individual. It is a basic account that allows individuals to deposit money and earn moderate interest on the balance maintained in the account. The interest rates for savings accounts range from 2.70% – 6.00% depending on the bank account balance and the type of savings account of the bank. The interest on a savings account is calculated daily but credited every quarter, which may vary depending on the bank. This article covers the top banks savings account interest rate

Savings Account Interest Rates for All Banks 2021

BanksInterest Rate (p.a.)Minimum Balance
SBI2.75%NIL
HDFC Bank3.00% – 3.50%Rs.2500 to Rs.10,000
Kotak Mahindra Bank3.50%Rs.5000 to Rs.10,000
DBS Bank3.25% – 3.75%Rs.5000
Axis Bank3.00% – 3.50%Rs.10,000
ICICI Bank3.00% – 3.50%Rs.1000 to Rs. 10,000
IDFC Bank3.00% –  5.00%Rs.10,000 or Rs. 25,000
IndusInd Bank4.00% – 6.00%Rs.5000 to Rs. 10,000
Yes Bank4.00% – 5.25%Rs.10,000 to Rs.25,000
Standard Chartered Bank0.50% – 3.25%Rs.10,000
Citi Bank2.50%Rs.25,000
RBL Bank4.25% – 6.00%Rs.2500 to Rs.25000
DCB Bank4.00% – 6.25%Rs.10,000
IDBI Bank3.00% – 3.35%Rs.2500 to Rs.5000
Bandhan Bank3.00% – 5.00%Rs.5000 to Rs.100,000
Bank of Baroda2.75% – 3.20%Rs.500 to Rs.1000
India Post Office4.00%Rs.500
Punjab National Bank2.80% – 2.85%Rs.500 to Rs.2000
South Indian Bank2.35% – 4.50%NIL
Bank of India2.90%Rs.1000
Union Bank of India2.90%NIL
Indian Bank2.90%Rs.250
Canara Bank2.90% – 3.20%Rs.500 to Rs.1000
UCO Bank3.50% – 4.00%Rs.250 to Rs.1000
ESAF Small Finance Bank4.00% – 6.50%Rs.1000
AU Small Finance Bank3.50% – 7.00%Rs.5000
Equitas Small Finance Bank3.50% – 7.00%Rs.2500 to Rs.10,000
Jana Small Finance Bank3.00% – 6.50%Rs.2000
Ujjivan Small Finance bank4.00% – 7.00%Rs.5000
*Interest rates are subject to change

Best Bank for Savings Account with Highest Interest Rates

The savings account is the basic type of account that allows people to deposit money and keep it safe. It is a liquid instrument as individuals can withdraw money anytime at their convenience without any restrictions. 

There are multiple banks that offer savings account facilities in India. To know the best savings account, it is essential to compare the interest rates and their features like the affordable minimum balance requirement and flexibility to make deposits and withdrawals. Also, they should check some additional perks like the availability of bank branches in the city of their residence, facilities like mobile and internet banking, the convenience of ATM withdrawals and instant assistance. Therefore, if these criteria are fulfilled, individuals can choose any bank account based on their convenience. Here is a list of best banks for savings accounts with the highest interest rates. 

1. Kotak 811 Edge Digital Savings Account

Kotak Banks’ 811 Edge digital savings account is a full-service digital banking ecosystem on mobile. This has been designed with the idea of simplicity and ease of use for customers. It offers a complete paperless account opening process with a minimum balance requirement. Besides this, it offers a free platinum debit card, free online fund transfers, virtual debit card and more benefits. Some of its features are – 

  • Average Monthly Balance: Rs.10,000
  • Interest Rates: 3.50%
  • Non-maintenance Charges: 5% of the shortfall in required AMB per month
  • Cash Transactions: free up to 4 transactions or Rs. 2lakh/month, whichever is earlier. Post free limits, charges are Rs. 4.5 per Rs. 1000 with a minimum of Rs. 150.
  • Debit Card Charges: For Platinum Debit Card – Rs.150 p.a

Learn: Kotak Bank Savings Account

2. Axis ASAP Savings Account

Axis Bank ASAP savings account is full-service digital banking on mobile. The account opening is a complete paperless process with a video-based KYC. It offers a virtual debit card to its customers, 3x rewards points with debit card spends and several discounts on movie tickets, dining etc. Some of its other features are – 

  • Average Monthly Balance: Rs.10,000
  • Interest Rates: 3.00% – 3.50%
  • Non-maintenance Charges: Rs.5 per 100 of the shortfall + Rs.75
  • Cash Transactions: above the set limit, charges are Rs.5 per Rs.1000 or Rs.150, whichever is higher.
  • Debit Card Charges: Rs.21 per transaction

3. Digibank by DBS

Digibank is a fully digital online savings account that gives an experience of new-age intelligent banking solutions. It offers exclusive rewards and discounts on digibank BigBasket debit cards to instant fund transfer facilities, investment options and mobile banking. Opening a Digibank savings account can be done instantly by downloading the mobile app, filling in the required details and uploading scanned copies of documents. Some of its other features are –

  • Average Monthly Balance: Rs.5,000
  • Interest Rates: ranges from 3.25% to 3.75%
  • Non-maintenance Charges: Rs.200
  • Cash Transactions: < 2 lakhs, 5 transactions free, > 2 lakhs 10 transactions free, and above the set limit, charges are Rs.20 per transaction
  • Debit Card Charges: Rs.150 p.a. and no charges on transactions. 

4. SBI Insta Plus Savings Account

SBI is India’s leading bank offering a basket of services to its customers. The SBI Insta Plus Savings account is a digital account that can be opened instantly with the help of the dedicated mobile application YONO. It is a paperless account opening process. Also, it offers instant fund transfer facilities and 24*7 mobile banking facilities. Some of its other features are –

  • Average Monthly Balance: NIL
  • Interest Rates: 2.75%
  • Non-maintenance Charges: NIL
  • Cash Transactions: 4 free monthly transactions and after that Rs.15/transaction
  • Debit Card Charges: Rs.125 p.a.and no charges on transactions. 

5. ICICI Regular Savings Account

ICICI bank is another best bank to open a savings account as it offers the best customer services in banking. The regular savings account provides the convenience of any time and anywhere banking in India. Also, it offers a silver debit card to its customers that allows them to earn rewards points on spending. Furthermore, customers can enjoy a seamless mobile banking facility through the iMobile app. Recently, they also launched a PayLater facility for its customers. Some of its other features are – 

  • Average Monthly Balance: Rs. 1,000 to Rs.10,000
  • Interest Rates: 3.00% to 3.50%
  • Non-maintenance Charges: Rs.100 + 5% of the shortfall in required AMB.
  • Cash Transactions: 4 free transactions per month, above free limit – Rs.150 per transaction
  • Debit Card Charges: Rs.150 p.a

6. HDFC Regular Savings Account

HDFC Bank is one of the largest private banks in India, which offers 19 distinct types of savings accounts options to its customers. The regular savings account is a one-stop-shop for savings, payments, investments and shopping. It offers special discounts through its online shopping portal, safe deposit lockers and a rupay or millennia debit card. Besides this, its net banking, mobile banking and phone banking facilities allow customers for seamless transactions and pay utility bills. Also, it allows setting standing instructions for regular payments. Some of its other features are – 

  • Average Monthly Balance: Rs. 2,500 to Rs.10,000
  • Interest Rates: 3.00% to 3.50%
  • Non-maintenance Charges: varies from Rs.150 to Rs.500 depending on different AMB slabs.
  • Cash Transactions: 4 free transactions per month, above free limit – Rs.150 per transaction
  • Debit Card Charges: Rs.200 p.a and Rs.21 per transaction above 5 transactions.

7. Indus Delite Savings Account

IndusInd Bank offers customisation on its savings accounts according to customers profile. It is a premium savings account crafted to deliver the best banking experience for its clients. It offers special discounts on movies, dining, swiggy, big basket and cashback on shopping. Also, it offers a discount on the locker facility and a free demat account for one year. Furthermore, customers also get a complimentary Platinum debit card. Besides this, Indus Mobile is an all in one store app for all these services by IndusInd Bank. Some of the other features of IndusInd Bank are – 

  • Average Monthly Balance: NIL
  • Interest Rates: 4% – 6%
  • Non-maintenance Charges: NIL
  • Cash Transactions: 5 free transactions per month, above free limit – Rs.20 per transaction
  • Debit Card Charges: Rs.500 p.a. 

8. RBL Digital Savings Account

RBL Bank digital savings account allows customers to open accounts instantly online through their website. It is simple and convenient through mobile banking (RBL MoBank app), WhatsApp banking, internet banking, and RBL cares Chatbot. It offers attractive interest rates and account benefits. Plus, it offers a Signature debit card where customers can enjoy 1% cashback every month (up to Rs.1000) for spending. Some of the other features are – 

  • Average Monthly Balance: Rs. 2500 to Rs.25000
  • Interest Rates: 4.25% to 6%
  • Non-maintenance Charges: NIL
  • Cash Transactions: Rs.20 per transaction
  • Debit Card Charges: NIL on virtual debit card and Rs.100 p.a for other debit cards

9. Yes Bank Digital Savings Account

Yes bank digital savings account allows customers to open account digitally at their home. Opening a digital account has become easy, fast, secure and paperless. It offers exciting features like attractive interest rates, exciting onboarding offers, virtual debit cards and many more. Also, it offers special accounts for women for their different financial needs and priorities. Further, it also provides free demat and locker facilities to its customers. Some of the other features are – 

  • Average Monthly Balance: Rs,10,000 to Rs. 25,000
  • Interest Rates: 4.00% to 5.25%
  • Non-maintenance Charges: 5% to 10% of the balance shortfall based on the AMB
  • Cash Transactions: free 4 transactions or Rs.2lakhs whichever is earlier, post this Rs.3/1000 up to Rs.50/transaction
  • Debit Card Charges: Rs.150 p.a 

10. IDFC First Bank Savings Account

IDFC First Bank savings account is another digital savings account with a paperless account opening with video KYC. It provides the signature card to its users to meet their financial needs. Also, it offers attractive interest rates to its customers. Besides this, it allows free and unlimited ATM transactions at any bank in India, daily higher ATM withdrawal benefits cashback on using their debit card. Some of the other features are – 

  • Average Monthly Balance: Rs,10,000 or Rs. 25,000
  • Interest Rates: 3.00% to 5.00%
  • Non-maintenance Charges: Rs.50 to Rs.400 based on the AMB
  • Cash Transactions: 10 free transactions and post this, Rs.20 for every transaction. 
  • Debit Card Charges: NIL

Best Alternatives to Bank Savings Accounts with Higher Returns

Investors usually think that keeping money in a savings account is safe and ensures liquidity to use their funds. The returns from savings accounts do not help in the long term.  However, there are other alternative investment options that can offer higher returns than savings accounts. Also, the risk associated with them is lower and more tax efficient. The following are the best alternatives to savings accounts with higher returns.

Liquid Funds

The objective of parking money in a liquid fund rather than a savings account is to earn higher returns. These funds invest in debt securities with maturities up to 91 days. Due to the short term maturity of securities, they have the least amount of risk. Also, the withdrawal amount is credited to the account within a day. Thus, these funds are ideal for investors who wish to park their excess cash for a short period of time. 

Ultra Short Term Funds

If the investor does not require funds for 2-3 months, they can park their idle money in the ultra short term funds. They invest in securities with short term maturity. Due to the low maturity duration, these funds are slightly riskier than liquid funds. However, they are still one of the low-risk category funds and can generate better returns than savings bank accounts. Therefore, these funds are best to park money for a couple of months, providing easy liquidity to investors. The withdrawal amount is credited to the account within one business day.

Treasury Bills

The Government of India issues treasury bills where investors can consider short-term investing. These securities offer safety, liquidity and decent returns. T-bills are issued at a discount and redeemed at the nominal value to help investors earn the difference between two prices. Also, the returns from t-bills are lower than debt funds, but they are safe investment options. Moreover, the maturity period for these securities varies from 91 days to 365 days allowing investors to choose based on their short term financial objective. 

Certificate of Deposits(CDs)

Investing in a certificate of deposits provides investors with flexibility in utilising short-term funds. CDs work similar to bank fixed deposits but provide higher returns than FD. However, investment in CD can be made in high denomination only for a specific period. Also, investing in a CD will lock money till the maturity period. Thus, if investors have surplus cash in hand and can spare it for a while, they can consider investing in a CD. Also, they can opt for CDs with different maturity dates to access money at different points in time. 

Bank Fixed Deposits

Fixed deposits are popular investment options that offer guaranteed returns to investors. They are the safest investment to provide better returns than a savings account. Most banks offer returns between 3-7% on FD investments depending on the tenure. Also, there is a preferential FD rate for senior citizens. It allows investors to withdraw from their FD prematurely with a penalty. Furthermore, investing in a tax-saving fixed deposit allows a tax deduction of up to Rs.1,50,000 under Section 80C of the Income Tax Act, 1961.

Bank Recurring Deposits

Recurring deposits are also short term investment options offered by banks that can offer higher returns than a savings account. In a recurring deposit, investors have to deposit the amount every month. Investing in an RD offers guaranteed returns, liquidity and flexibility to investors. The interest rate on RD may vary depending on the bank. Moreover, a recurring deposit is also considered a low-risk investment option where the tenure ranges between 6 months to 10 years

Conclusion

Saving money is very important to handle any unnecessary expenses and uncertain situations. Thus, experts advise having an emergency fund covering at least six months to 1-year expenses. Individuals should park their excess cash in hand in other funds to help them earn better returns than a savings account. Ultimately, it also depends on the short term financial requirement of investors to help them choose their suitable investment options. 

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