Having a significant amount of money is always important. It helps you tackle various emergency situations. As a rule of thumb, we should save at least 20% of our income for future needs, starting with a savings account. Not only is your hard-earned money parked safely, but you also get savings account interest in return.
Know what a savings account meaning revolves around keeping enough amount in your account for future needs. It is one of the fundamental banking products. These accounts can be opened for free. However, you may be required to maintain a minimum balance when you open such an account.
Explore savings account interest rates and how they work in this post.
Savings Account Interest – A Brief
Interest is money you earn in addition to the amount you have deposited.
How to Choose a Savings Account?
Since there are so many different savings accounts to choose from, it can be difficult for customers to make a decision. A few tips and tricks can help you find the right savings account that suits your needs.
· First, check the reputation of the bank. The larger and more well-known the bank is, the safer your money will be and the more features you will be able to take advantage of.
· Next, check the interest rate that the bank is offering. The higher the interest rate, the more money you will earn for the money you deposited in your account.
· Lastly, check the minimum deposit that is required. Most banks will ask you to keep a minimum deposit in your account as it is free.
How Does Savings Account Interest Work?
Let’s understand how this interest works:
Advantages of Compound Interest
A savings account interest rate is always compound interest. This means that the interest you receive takes into account the money you have deposited in addition to any previous interest you have received from the bank.
Hence, even if you have deposited the same amount in your savings account, the interest you receive will increase every year due to the interest you have previously earned.
The Bank Owes You Interest
Why does the bank pay you interest? The answer is simple. Banks can use your deposited money to provide loans to others at a higher interest rate. That is how the banks earn money.
Receive Periodic Payments
Depending on your bank and account, the interest may be given to you monthly, quarterly, or yearly. Most Indian banks provide interest every quarter. The interest that you will receive from the bank is calculated daily.
Benefits of Savings Account Interests
There are several benefits of opening a savings account with a bank.
Interest
The biggest advantage is that you receive interest on the amount that you have deposited. This means you earn money when you keep your money with a bank. In contrast, if you keep your money locked in your cupboard, you won’t earn any money from it.
Convenience
There are other benefits to a savings account as well. You can transfer any amount from your savings account to a different person’s savings account. This helps you pay for any goods or services without any hassle. You can pay through cheques, debit cards, credit cards, bank transfers, UPI, etc.
Security
Further, keeping your money with a bank means that the money is in safe hands. You can claim back your money at any time.
ConclusionGetting savings account interest is a lucrative way to keep a significant amount by your side. A savings account signifies that the bank holds your money in trust. You can earn interest while also keeping your money safe and secure.