Opt For Liquid Funds- When Interest Rate On Savings Account Are Falling

Apart from some of the mid-sized and newer banks in addition to the differential banking players that offer high interest rate on savings account such as Yes bank, Airtel Payments Bank, RBL Bank for which the rate ranges in between 5.5-7.25%, most of the commercial banks are lowering interest rates on the back of economic indicators such as inflation and other factors.

Largest public sector lender SBI on July 31, 2017 reduced its interest rate on savings account with deposits upto Rs. 1 crore from the existing 4% to 3.5%.

So, what should be your take in such a situation

As early as 2010-11, most of the banks offered interest rate on savings account in the range of 3.5%. But post te deregulation on this front by RBI in 2011, banks increased it to 4%.

Now when the decline has again been brought about, your bestest recourse can be that you maintain only that amount in savings bank which suffices to meet two-three month's expenses and rest you divert to liquid funds.

Please note that in case of savings bank interest is earned on the basis of daily balance that is maintained in the account. On the contrary, liquid funds can offer stupendous return of around 6.5% while offering the liquidity at par with savings bank account. So, at best do not leave your money idle in savings account and instead put it to use and let it earn for you.

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