Saving Account Interest Rates

A savings account opened at a bank is a basic type of account that allows you to deposit money and keep it safe while earning moderate interest on the balance maintained in the accounts. Different financial institutions provide varying rates of interest on a savings account. The rate of interest on savings accounts is further based on the minimum average balance maintained in the account. As per the current saving bank interest rates, Equitas Small Finance Bank, Jana Small Finance Bank provides the highest saving account rates of upto 7.25%.

As per the RBI mandate, Interest is calculated on a daily basis on your closing balance of savings account. However, interest on savings account can be paid monthly, annually or quarterly. Banks use the following formula for calculating interest on savings accounts.

Interest = Amount (Daily balance)*(No of days)* Interest/Days in the year.

The example below explains the method to calculate interest on a savings account on a daily basis.

Illustration: Mr. A has ₹ 2,00,000 in his savings account from 1st June to 26th June of a year. On 26th June, he withdrew 1,80,000. What will be the total interest amount earned @ rate of 4% in the month calculated on a daily basis?

Interest for 26 days = 2,00,000 * 26 * (4/100)*365 = ₹ 569
Interest of 4 days = 20,000 * 4 * (4/100) * 365 = ₹ 8.76
Total interest earned during the month at the rate of 4% p.a. calculated on a daily basis is ₹ 577.76 (₹ 569 + ₹ 8.76)

The table below mentions the highest interest savings account with the best bank for savings accounts.

Bank Name	Interest Rate	Minimum Balance
Jana Small Finance Bank	3.50% - 7.25%	Rs. 2,500
AU Small Finance Bank	3.50% - 7.00%	Rs. 5,000
ESAF Small Finance Bank	4.00% - 7.00%	Rs. 1,000
Equitas Small Finance Bank	3.50% - 7.00%	N.A
Ujjivan Small Finance Bank	4.00% - 7.00%	N.A
Yes Bank	4.00% - 5.50%	Customized Account: Rs. 10,000, Yes First: Nil, Yes Primia: Rs. 2 Lakh
South Indian Bank	2.35% - 4.50%	N.A
Axis Bank	3.50% - 4.00%	NIL
DBS Bank	3.00% - 4.00%	Average Monthly Balance of Rs. 5000
India Post Office	4.00%	Rs. 500
HDFC Bank	3.00% - 3.50%	Rs. 10,000 for metro Urban branches Rs. 5,000 For Semi Urban branches Rs. 2,500 for Rural branches is required to open a Savings Regular Account
ICICI Bank	3.00% - 3.50%	Rs. 10,000 in metro and Urban locations, Rs. 5,000 in Semi Urban and Rs. 2,000 in Rural locations
Kotak Bank	3.50%	Rs. 5,000
IDBI Bank	3.00% - 3.35%	Rs. 5,000 Metro and Urban, Rs. 2,500 Semi Urban, Rs. 500 Rural
Standard Chartered Bank	0.50% - 3.25%	NIL
Andhra Bank	2.90%	Rs. 150
Canara Bank	2.90%	Rs. 1,000 for Metro, Urban and Semi Urban branches and Rs. 500 for Rural branches
Indian Bank	2.90%	Rs. 250 for non cheque operation and Rs. 500 for cheque operation
Bank of Baroda	2.75%	QAB Rs. 500 and Rs. 1,000 for Rural and Urban respectively. Zero balance facility only for salaried employees in Central/ State Govt. Public and Private Limited Companies, Agents of Life and General Insurance Corporations and Students
PNB	2.70% - 2.75%	Rs. 500 to 1,000
UCO Bank	2.60% - 2.75%	AQB ranges between Rs. 250 and Rs. 1,000
SBI	2.70%	NIL
Citibank	2.50%	Rs. 25,000

With MyLoanCare, you can easily compare savings account interest rates of top banks in one place without any hassle. It constantly researches the savings account offers of all key lenders in the market and feeds the detailed saving interest rate, minimum balance required, and other parameters. You can also easily find a detailed bank savings interest rate comparison of top banks and payment banks to choose the best savings account rate.

Payments Bank	Minimum Balance	Interest Rate
Paytm	NIL	2.75%
Airtel Payments Bank Ltd	NIL	6%
India Post Payment Bank	NIL	2.75%
FINO Payments Bank	NIL	2.75%

Bank Name	Interest Rate
Axis Bank	3.50% - 4.00%
Standard Chartered Bank	0.50% - 3.25%
SBI	2.70% - 2.70%

✅Is savings account interest taxable?

Yes, savings account interest is taxable. Under section 80 TTA of the income tax act, savings account interest up to ₹ 10,000 accrued during a year is tax free.

✅How do interest rates on savings accounts work?

Interest rates on savings accounts are calculated on the average balances in the account on a daily basis. This interest is however paid monthly, annually or quarterly as per the policy of the bank. The interest on savings accounts may be affected if one does not maintain the minimum balance requirement of the bank.

✅Which bank has the best interest rate for savings?

Presently, Equitas Small Finance Bank, Jana Small Finance Bank provides interest rate upto 7.25% and thus has best interest rate for savings. Apart, some best zero balance savings accounts with the highest rate are 4.00%, 3.25%, 2.70%.

✅What is the average interest rate on a savings account?

Earlier interest rates on savings accounts were fixed at 4.00% per annum. However, the rates were deregulated by RBI in 2011, and now banks are allowed to fix their own savings interest rates. As a result of deregulation, the savings interest rates offered by banks in India today range from 0.50% to 7.25%.

✅Can DEMAT account be opened with savings account?

Yes, you can open a DEMAT account can along with a Savings account. DEMAT accounts are required to trade in various stock market instruments and they have different charges from the savings account.