3 simple ways to enhance your Savings account return

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3 simple ways to enhance your Savings account return

Our money management journey starts with our savings account.

Your first salary, pocket money, money gift would most probably lend in our first bank account, i.e., SAVINGS account.

We are so comfortable and familiar with the savings account that we never bother about the benefits or alternatives.

This blog post will give you three ways to enhance the benefits of your savings bank account.

What makes a savings bank account so popular?

SAFETY is the primary reason for our love for the savings account.

We always consider that our money is assured and without any risk.

As per the Deposit insurance and credit guarantee corporation (DICGC), all deposits such as savings, fixed, current, recurring, etc., are insured up to 5 lakhs.

Each depositor in a bank is insured up to a maximum of ₹ 5,00,000 (Rupees Five Lakhs) for both principal and interest amount held by him.

Therefore it gives peace of mind to the customer that their hard-earned money is safe.

Second is liquidity

The ease and convenience of using a bank account are unparalleled. The availability of money round the clock on demand has given all together different dimensions.

Multiple ways through which customers can withdraw the money adds more confidence.

There is also very low, or no barrier for the quantum of money one can use or withdraw from the account.

When to look for Savings account Alternative?

We keep money in our savings bank account primarily for emergency purpose—those events which we can not plan for or think of.

The ideal money in your bank account would be anywhere between 6-8 months of your monthly gross income or 10-12 months of your monthly expenses.

Now in case you are maintaining this much amount or more in your bank account, you should explore other options to park your money to put the money work harder for you.

Most of us pay little attention to the interest we get paid on the money we park on the saving balance.

Reserve Bank of India in 2011 brought changes and deregulated interest rates on saving deposits. Before that, every bank would offer 4% per annum, but now banks can offer interest whatever they deemed fit.

With the falling interest rate in the economy, the interest rate in our savings accounts also falls.

From 05/2020, the SBI savings account is paying only 2.70% per annum on your savings account balance. Click to see how other banks are paying the interest.

Since we are so comfortable, we never explore other alternative options.

Consider that even you get 1-2 percent higher interest, it is 30-40% higher interest on your money.

There are multiple avenues and ways available through which you can earn higher tax-efficient returns.

The three ways

There are multiple ways to get an additional return for the money you have in their savings bank account.

But before diving into multiple options, keep in mind for the purpose you want to park the money. The two essential features to keep in mind are liquidity and safety.

Addition return/interest is one of the criteria, but it should not be the only criteria. So let’s dive into the ways and vehicles to look while getting our goals fulfilled.

Sweep in Fixed Deposits.

All the banks will give you an additional interest on your Fixed Deposit compared to your savings bank account.

The easiest way to move additional money in your bank account to Fixed deposit schemes is to give a standing instruction to the bank for transferring the money available in your bank account to Fixed deposit after a minimum threshold.

For example, you can instruct that bank can transfer the money to a Fixed deposit over and above, say Rs50,000/- in your savings bank account.

The minimum amount to hold will be dependent upon individual to individual.

 You will be the best judge to determine the limit. This way you will have your money work better for you.

Mutual Funds

Mutual Funds as an investment vehicle provide multiple solutions for parking your short-term money.  They are liquid as well as tax efficient.

Liquid Funds/ Overnight Funds

These funds are the least volatile category of funds in mutual funds. They are debt funds that invest in debt instruments, predominantly investing in papers with an average maturity of fewer than 90 days.

You can get your money back on all working days on T+1 days’ notice, provided you have given a withdrawal request on a working day. For example, you can get your money in your bank account on Tuesday if you have submitted your request to the company on Monday during working hours.

There is also an INSTANT facility available with mutual funds.

Here investors can get an instant amount in a bank account subject to some limit.

You can redeem up to Rs 50,000 or 90 percent of the portfolio value in liquid funds across folios under a permanent account number (PAN) per day.

For example, suppose you have Rs 1 lakh in a liquid fund, offering an instant redemption facility. In that case, you can withdraw Rs 50000 on a given day, as the amount satisfies both conditions – the maximum limit of Rs 50000 and it is below 90 percent of the investment amount. But if you have a balance of Rs 50000 in your liquid fund, you can withdraw a maximum of Rs 45000.

Anytime money card

Nippon India Mutual Fund has launched this facility to withdraw through ATMs or purchase from shops just like your bank ATM cards.

Once you invest in Liquid or overnight schemes of the company, you can apply for the card.

I would recommend the money laying in your bank account over and above 1-2 months expense can be parked in these kinds of schemes.  The ideal parking time in these funds would be 1-3 months.

Ultrashort Term Funds

These funds would be more volatile than liquid funds but can offer higher returns. For 3-6 months, These funds are suitable. 

Ultra-short-term funds will have higher maturity papers resulting in higher volatility.

Arbitrage funds

These funds provide the best of both equity and debt mutual fund schemes. They will provide safety and liquidity of liquid funds and tax efficiency of equity funds.

The taxation of Arbitrage funds is 15% in gains if withdrawn before one year. After one year, the profits will be taxed at 10% over and above equity gains of 1 Lakh.

Whereas all gain in debt is taxed at the marginal rate if withdrawn before three years.

Any money you want to park for above six months can invest in these kinds of investment vehicles.

Small Finance Banks

Large numbers of new-age banks are offering very competitive rates on their fixed deposits and saving bank accounts.

Research them and make an informed decision.

Your money’s segregation into a multiple bank account will make your money covered under deposit insurance and credit guarantee corporation (DICGC) up to 5 lakhs.

To mitigate the risk from the banks can diversify your money into multiple banks and multiple accounts.


If you have deposits with more than one bank, the deposit insurance coverage limit is applied separately to each bank’s deposits.

Also, if individuals open more than one joint accounts in which their names are not in the same order, for example, A, B and C; C, B and A; C, A, and B; A, C and B; or group of persons are different say A, B, and C, and A, B, and D, etc. then, the deposits held in these joint accounts are considered as held in the different capacity and different right


We have learned that we need to work hard to earn money; what we need to realize is that if we increase our money awareness, we can put our hard-earned money to work.

Money awareness will help you create passive income for yourself—an source that can give you additional income and comfort

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