Every day, Ram goes to the office and works hard for his money. He acts responsibly and saves his money in various financial instruments. Some of his money is invested in stocks, some in mutual funds, while some is kept in term deposits (in case of emergency). He doesn’t save a lot of money in his savings account because he thinks the monthly installments are quarterly and this process will take time. But Ram, and many of you reading this article, will realize the benefits of having a savings account that pays monthly.
One of the benefits of having a savings account is earning interest on your bank balance, quarterly or semi-annually. Savings accounts are the most liquid form of bank deposits, which is why they are the first choice for parking savings. The interest generated by the balance of a savings bank account is often overlooked and underestimated. Most people consult it once a year to calculate our “income from other sources” when filing our tax returns.
Unlike fixed deposits and recurring deposits, withdrawing money from your savings bank account is faster and easier. This makes it an ideal place to maintain an emergency fund. In addition, this type of bank account is regularly used to collect income and pay current expenses. But an added benefit offered to customers today is the monthly interest payment feature, which was only available with fixed deposits until recently. Let’s find out how a monthly interest payment option can help you make better use of your savings account.
How does the monthly interest payment work?
While interest on your savings account is calculated daily, the monthly interest payment feature allows interest on your savings balance to be compounded and paid to you each month. And IDFC FIRST Bank activated a monthly interest credit facility on all of its savings accounts from July 1, 2021.
With this type of savings bank account, the interest earned becomes even more liquid and you will get more out of it than ever before.
Why only benefit quarterly when you pay EMI monthly?
Since most of your household dues are monthly expenses – utility bills, rent, EMI, etc. – you take this into account when preparing your monthly budget. Similarly, expected income during the month is taken into account when finalizing your monthly budget. Income and expenses that are not monthly appear as an anomaly in your budget and financial planning. But a monthly interest payment allows you to add an additional source of income to your monthly budget.
The amount of interest income from your savings account will depend on the balance you maintain. Suppose you maintain a lower amount and opt for the IDFC FIRST bank savings account with monthly interest payments, you can meet small expenses like your cell phone bill or a spontaneous dinner. On the other hand, with a larger balance maintained, you can even aim to partially pay an EMI amount or pay travel expenses from the monthly payment earned in your savings account.
Open more benefits through your savings account
While interest rates have stagnated over the past two years, IDFC FIRST Bank continues to offer an attractive interest rate of up to 5% on savings accounts. This 5% interest rate is offered on a savings account balance between Rs 10 lakh and Rs 2 crore. For balances between Rs 1 lakh and Rs 10 lakh, the interest rate offered is 4.5%. Even a balance below Rs 1 lakh secures 4% interest.
Apart from the monthly interest payment, the IDFC FIRST Bank Savings Account offers various other benefits. It includes personal accident insurance up to Rs 35 lakh, air accident insurance of Rs 1 crore and purchase protection, which are available if you maintain an average monthly balance of Rs 25,000. Personal accident insurance of Rs 2 lakh is also available if an average monthly balance of Rs 10,000 is maintained. In fact, your IDFC First Bank Savings Account may end up saving your insurance premium!
While many benefits await you with the IDFC First Bank Savings Account, the monthly interest payment is a welcome introduction to banking. With monthly interest credited to your account, hopefully your savings and income will increase further.
Follow the link: Savings accounts – Open a bank account online | IDFC FIRST Bank