Every day, Ram goes to the office and works hard for his money. He does the responsible thing and saves his money in various financial instruments. Some of his money is invested in shares, others in mutual funds, while some are kept in fixed deposits (in case of an emergency). He doesn't save much money in his savings account, as he believes the monthly payouts are quarterly, and it will be a time-consuming process. But Ram, and many of you reading this piece, will realise the benefits of having a savings account that assures monthly payouts.
One of the perks of having a savings bank account is earning interest on your bank balance, either quarterly or half-yearly. Savings accounts are the most liquid form of bank deposits, which is why they are the primary choice for parking savings. The interest generated from a savings bank account balance is often overlooked and underappreciated. Most people look at it once a year to calculate our “Income from Other Sources” while filing our income tax returns.
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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. Besides, this type of bank account is regularly used for receiving income and paying day-to-day expenses. But an added advantage offered to customers today is the monthly interest payout feature, which was only available with fixed deposits until recently. Let’s find out how a monthly interest payout option can help you better use your savings account.
How Does Monthly Interest Payout Work?
While the interest on your savings account is calculated daily, the monthly interest payout feature allows for the interest on your savings balance to be compounded and paid to you every month. And IDFC FIRST Bank has activated a monthly interest credit facility on all its savings accounts from 1 July 2021.
With this kind of savings bank account, the interest earned becomes even more liquid, and you stand to gain more from it than ever before.
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Why Benefit Only Quarterly When You Pay EMIs Monthly?
Since most of your household dues are monthly expenses - utility bills, house rent, EMIs, etc. - you consider them while preparing your monthly budget. Similarly, income expected to come in during the month is considered while finalising your monthly budget. Incomes and expenses that feature on a non-monthly basis stand out as an anomaly in your budget and financial planning. But a monthly interest payout lets you add one more income source to your monthly budget.
The amount of interest income from your savings account will depend on the balance you maintain. Let’s assume that you maintain a smaller amount and opt for the IDFC FIRST Bank Savings Account with monthly interest payouts, you can meet petty expenses like your mobile phone bill or a spontaneous dinner date. On the other hand, with a larger balance maintained, you can even target to partially pay an EMI amount or afford travel expenses from the monthly payout earned on your savings account.
Open Up More Benefits Through Your Savings Account
While interest rates have stagnated over the last couple of years, IDFC FIRST Bank continues to offer an enticing 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 of less than Rs 1 lakh ensures an interest of 4%.
Apart from the monthly interest payout, IDFC FIRST Bank Savings Account offers various other benefits. It includes personal accident insurance of 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 a monthly average balance of Rs 10,000 is maintained. In fact, your IDFC First Bank Savings Account can end up saving your insurance premium amount!
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While benefits aplenty await you with IDFC First Bank Savings Account, the monthly payout of interest is a welcome introduction to banking. With monthly interests getting credited to your account, one can hope that there will be more growth in your savings and earnings.
