Want FD like interest? These banks give returns up to 8% on savings a/c!

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Fixed Deposit, commonly known as FD, is a popular investment option. To achieve higher returns, it is advised to consider placing money in FD instead of a savings account. Large banks offer interest rates on FDs for a short to medium term, typically ranging from 1 to 3 years, with rates currently varying between 6% to 8%. However, some private banks are providing interest rates of up to 8% on savings accounts, making it comparable to the returns of a Fixed Deposit in a Savings Account. In contrast, many larger banks offer only a modest interest rate of around 2.5% to 3% on savings accounts.

Let’s delve into specific banks and their interest rates:

DCB Bank offers an interest rate of up to 8% on savings accounts with balances less than 2 crore rupees. This interest rate makes DCB Bank one of the top-ranking private banks concerning interest rates. The current rates are applicable from September 27, 2023.

RBL Bank offers varying interest rates based on the daily balance in the account. For balances exceeding 25 lakhs up to 2 crores, the interest rate is 7.50%. Meanwhile, for deposits up to 1 lakh, the interest rate is 4.25%, and for balances between 1 lakh and 10 lakhs, the interest rate is 5.50%.

Suryoday Small Finance Bank is offering customers an interest rate of 7.50% on savings account balances ranging from 1 rupee to 10 lakh rupees, and on balances from 5 crore rupees to 25 crore rupees, the interest rate is 7.75%.

Ujjivan Small Finance Bank provides customers with interest rates ranging from 3.50% to 7.50% on savings accounts. For deposits up to 1 lakh rupees, the interest rate is 3.50%, for amounts between 1 to 5 lakh rupees, the rate is 5%, and for savings account balances exceeding 5 lakh rupees, customers can earn interest of up to 7.50%.

AU Small Finance Bank offers an interest rate of up to 7.25% on savings bank deposits. For amounts less than 5 crore rupees, the interest rate is 7.25%, while for balances below 1 crore rupees, customers can earn a return of 7%. These rates are effective from September 11, 2023.

Next up is IDFC First Bank. They are offering an interest rate of 7% on savings account balances exceeding 5 lakh rupees, up to 25 crore rupees. For balances exceeding 25 crore rupees and up to 50 crore rupees, the interest rate is 6.75%. These rates are effective from October 1, 2023.

Is my money safe in a small finance bank?

There should be no concern about the security of the deposited amount in a small finance bank. Small finance banks are regulated by the Reserve Bank of India (RBI) and operate with a license from the RBI. The introduction of small finance banks was announced in the Budget of 2014-15 to promote banking services in the country. Small finance banks fall into a smaller category, and their business operations are limited. However, like larger banks, they provide services such as savings accounts, current accounts, fixed deposits (FDs), recurring deposits (RDs), and loans. Due to their smaller staff and limited resources, these banks have lower operational costs, allowing them to offer higher interest rates compared to larger banks.

To attract customers, small finance banks offer higher interest rates on savings accounts and FDs compared to larger banks. If the interest rates offered by these banks are suitable for you, opening a savings account with them can help you earn more interest. You can use these savings accounts as emergency funds, keeping an amount equivalent to 3 to 6 months of your income. In case of need, you can withdraw the money without any penalty. In contrast, fixed deposits may incur penalties for premature withdrawal before maturity.