Until a few years ago, savings account interest was not regulated. Banks had to offer an interest rate of just 4 per cent on balances in savings account. Interestingly, the balances in savings account were also not interest rates on daily balances, which led to investors losing a lot of money.
Interest Rate on Savings Accounts Freed
A few things have been changed by the regulators in the last few years. One is that interest rates on savings account has been freed. What this means is that banks are free to offer an interest rate beyond the earlier norm of 4 per cent.
Interest income on savings bank account up to Rs 10,000 tax free
The Interest income that is derived from savings bank account up to an amount of Rs 10,000 has also been made tax free. What this means is that you can now deduct the amount when filing your tax returns. In any case there never was no TDS on interest earned in a savings bank account.
Take a look at some of the banks that offer the highest interest rate on savings bank account
Yes Bank Savings Interest Rate
The balances in your savings account at Yes Bank will attract an interest rate of 7 per cent. Yes Bank has led for many years in offering the highest interest rate on savings account, since it was deregulated. This is almost as good as a short term interest rate fixed deposit. It's important to remember that this is for balances over Rs one lakh. Deposits under Rs 1 lakh will attract an interest rate of 6 per cent.
Kotak Mahindra Bank Savings Interest Rate
The one good thing about the Kotak Mahindra Bank savings account is that interest rates is a uniform 6 per cent, whether you maintain a balance of Rs 1 lakh of an average monthly balance or Rs 10,000. This makes the savings bank account highly attractive.
Ratnakar Bank Savings Interest Rate
Ratnakar Bank is offering an interest rate of 6.1 per cent per annum on balances in savings account. The bank has plans to go public very shortly with an IPO.
Indusind Bank Savings Interest Rate
Indusind Bank is offering an interest rate of 6 per cent for balances in the savings account if the amount remains above Rs 1 lakh. On the other hand the interest rate falls for balances under Rs 1 lakh to 4.5 per cent. The bank offers other good facilities for its customers, depending on the savings account you open.