If you are in the habit of keeping large balances in your savings account, you better look for a bank that gives you the best savings bank account interest.
Until a few years ago, savings account interest was regulated. However, banks are now free to offer you the best interest rates on savings account.
RBL Bank Savings Account
RBL Bank offers you an interest rate of upto 7.1 per cent on a savings account. But, wait a moment, that interest rates comes with a balance above Rs 10 lakh.
If you maintain a balance above Rs 1 lakh, the interest rates is 6.1 per cent and it is 5.1 per cent, below Rs 1 lakh.
There are a few interesting goodies that come with this. There is unlimited number of transactions that one can undertake on any ATMs across the country. Normally, there is a restriction that banks place on the number of transactions done through ATMs, after which there is a transaction charge.
It is absolutely free in the case of RBL Bank Savings Account. There is a 15 per cent discount on lockers and also a discount on home loan processing. By far the RBL Bank Savings Account should offer the best returns.
Yes Bank Savings Account
If you have balance in your savings account under Rs 1 crore, you get an interest on Savings Bank account of 6 per cent on savings account at Yes Bank.
Like RBL Bank, Yes Bank too could give you unlimited access to any bank ATMs across the country. Apart form this there is also free Real Time Gross Settlements and National Electronic Fund Transfer payment facility through NetBanking. Free Demand Draft issuance up to defined limits through Branch & NetBanking is also available.
Kotak Mahindra Bank Savings Account
Like Yes Bank, Kotak Mahindra Bank too offers the best interest rate on savings account. You get an interest rate of 6 per cent per annum and need to maintain balances of around Rs 10,000 per month, in the Edge Savings Account. Apart from this the Edge Account also allows you free at par pay cheques of 25 numbers per quarter.
You need to look at the other benefits before investing in the savings account.
Taxation on interest on savings account
Savings Bank accounts do not attract tax, if the interest income is less than Rs 10,000 per year. However, if you do cross that limit, the amount of interest earned is added to total income for the payment of taxes. There would also be a tax deducted at source (TDS) that would be applicable for such interest income earned.
Before applying for a savings bank account, if is good to look at location and convenience. If the branch is far away from the office or the residence, it does not make sense to apply though the benefits and the service maybe great.