How to get double interest on your savings account
How to get double interest on your savings account
If you are the kind who leaves a lot of money idle in your savings accounts, this news is going to make you happier and richer!
The Reserve Bank of India (RBI), in Tuesday’s monetary policy, made the regular repo and reverse repo rate cut announcements. These cuts are expected to bring down lending rates soon.
However, another key announcement that it made was the change in method of calculation of interest on your savings account. This change is effective from April 1, 2010.
Currently, banks calculate interest on your savings account as follows:
3.5 per cent per annum or 0.29 per cent per month on the minimum balance in your savings account between the 10th of the month and the end of the month.
What is a little unfair here is that interest is paid on the minimum balance in your account between the 10th of the month and the end of the month. But how many of us are left with large bank balances at the end of the month anyway!
While the rate of interest has been maintained at 3.5 per cent per annum, the good news is, that from next year, interest will be calculated as follows:
3.5 per cent per annum or 0.0095 per cent per day on the daily balance in your savings account.
If you can’t make sense of these numbers, allow us to explain.
Suppose your bank statement in April reads like this:
Date
Deposit (Rs)
Withdrawal (Rs) Balance (Rs) 1 April
5,000 2 April
30,000 35,000 3 April
4,000 31,000 5 April
4,000 27,000 10 April
12,000 15,000 13 April
2,700 17,700 18 April
4,500 13,200 25 April
5,500 7,700 30 April
7,700
Now:
Under the current method, you would get an interest of Rs 22.46 for April, that is 0.29 per cent on Rs 7,700 (the minimum balance in your account between the 10th and the 30th of April).
Next year:
Your interest would be a handsome Rs 48.82 for April. That is, 0.0095 per cent everyday on your balance of that day.
Easily, your idle money is going to make you far richer!
That doesn’t, however, give you an excuse to leave your money lying idle in the savings account.
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