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Tips for maximising savings account returns
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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The main reason to open a new bank account is to create a secure and safe place where you can store your funds and earn returns on deposits. Besides this, such saving accounts even allow you to build a strong relationship with the banks and endow you with access to different loan types at preferential interest rates and charges.
For many, a savings account is the primary interaction point with the banking and financial system. Apart from serving as a safe instrument to park your funds, a bank savings account also comes with other crucial benefits using which you can maximise your returns on the account. Read on to understand.
1. Earn interest
Unlike current accounts, savings accounts offer you interest on your deposits. A few financial institutions might provide you with higher interest on a savings account if you deposit a higher balance and ensure to maintain it. Others may even offer you a sweep-in feature, which permits you to generate higher returns.
2. Start investing
You can use your savings bank account to set up systematic investment plans for mutual fund investments. Also, you can perform systematic investments in fixed-income instruments like recurring deposits, voluntary provident funds, national pension schemes, etc., at a predefined date every month. You can also open a trading or demat account using your bank account for investment in preferred securities. Additionally, investments in fixed deposits, public provident funds, insurance, and distinct other investment instruments can be conducted via the net banking facility. Many banks even have set up their mobile apps through which you can perform most of your financial and non-financial activities.
3. Earn rewards through debit cards
If you use a savings bank account, it is likely that you also may have a debit card. Many banks provide a plethora of benefits, discounts, rewards, and offers if you make transactions using the debit card. For instance, you can get a high discount on the purchase of an air ticket or movie ticket if you use your debit card to make the transaction. A few debit cards also provide free insurance coverage on the products you purchase using the card. All such rewards on the debit card can allow you to save considerably over the long term. Thus, one of the prudent ways to make the most out of the saving account is to maximise the usage of the debit card to the extent possible to avail benefits and save money.
4.Set a savings goal
Inadequate discipline is a major reason why many struggle to meet their goal of creating wealth. To instil discipline, you must set financial goals and strictly abide by healthy saving practices. Remember the savings goal that you set must be realistic and you must stick to your goals in a patient and disciplined manner until the end of the investment horizon.
Ending note
While a savings account may appear as a simple deposit instrument, it can play an important role in your daily life and help you maximise returns and save better. Thus, make sure to open a savings account that matches your need and offers maximum benefits. You can use a saving account interest rate calculator to help you determine the potential interest earnings on your savings, allowing you to make informed decisions.
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