A Savings Account is India’s most common and valuable type of Bank Account. Besides keeping your savings protected in a bank and withdrawal flexibility, it rewards you with interest income. So, you can generate additional income quickly by keeping your savings deposited in the account. But, you might wonder how you can calculate interest rates on a Savings Account, and this article is here to help you.
How is the interest rate on the Savings Account calculated?
The interest rate onSavings Account is calculated daily based on your closing balance. The interest gets compounded daily, monthly, quarterly, or annually. Use the interest calculator to calculate the amount you can earn on your account balance.
The calculator can accurately estimate the amount you can make on your Savings Account balance using inputs such as your Savings Account balance and interest rate. It provides accurate calculations and is relatively easy to use for everyone.
What is the formula to calculate Savings Account interest?
A Savings Account generates compound interest. In other words, the interest you earn with the help of your Savings Account also makes interest if you maintain the same balance and do not withdraw the interest income. The formula to calculate Savings Account interest rates is –
- Interest on Savings Account = Daily balance * (No. of Days) * Interest / (365)
For instance, if the daily amount is Rs. 3 lakh and the Savings Account interest rate is 4 % per year, the calculation will be –
- Daily balance = 3 lakh
- Number of days = 30 days
- (4/100)/365 = Rs. 986 per month in interest
Reserve Bank of India (RBI) guidelines clearly state that banks must calculate interest on a Savings Account every day depending upon the closing balance available in the account.
How can you increase the interest rate on your Savings Account?
To increase your Bank Savings Account interest rate, thoroughly research before opting for a bank. You must adequately research several financial institutions and banks offering Savings Accounts. This way, you can find a bank that provides highly competitive interest rates and is convenient to access.
Additionally, you can easily open a Savings Account online from the comfort of your home with the help of Mobile Banking. Furthermore, you can also increase your interest income by:
- Comparing interest rates thoroughly when selecting a bank for your Savings Account
- Choosing the correct type of Savings Account and Banking app
- Saving mindfully to maintain a higher monthly balance in your Savings Account
The interest income from a Savings Account depends entirely on the interest rate fixed by the bank and the balance you maintain in the account. So, before opening a Savings Account online, you must choose a bank that offers high-interest rates.
