Fixed Deposits aka FDs are a giving but a long affair. You need to pay a premium for a good number of years to get the best returns after some 10-15 years. However, in recent months, the RBI has lowered the repo rate, which has prompted banks to lessen the interest rates on fixed deposits.
Banks and financial institutions, as per reports, are currently healthy enough to offer only a mere 2.5%-5.5% of interest rate on fixed deposits. Well, this might inspire you to look for a different investment option and here, savings accounts come to the rescue.
Despite the pandemic, some private banks and small finance banks are offering between 3% and 7.25% interest if you are ready to maintain a specific amount of average balance in your savings account.
Also, for the unaware, the interest amount earned from fixed deposits and savings accounts is usually taxable. However, as per Section 80TTA, a deduction of Rs 10,000 is offered in interest income earned from the savings account.
Here are saving banks that offer higher interest than a bank FD
Private Sector Banks
Small Finance Banks
Feature image source – The Financial Express