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Get the most from your savings account with these tips

Understanding the value of savings account interest rates is essential for growing wealth.

Get the most from your savings account with these tipsPremium
Get the most from your savings account with these tips

Gone are the days when opening a bank account was a day’s worth of standing in queues and filling out forms. Thanks to advancements in technology, opening an account online is super convenient. As a result, more and more people across different groups are opening online bank accounts to save, invest, shop and more. 

Whether starting your first job or planning for other life goals, it's essential to understand the value of savings account interest rates for growing your wealth. Read on as we highlight the practical strategies that can assist you in maximising your earnings. 

The Basics of a Savings Account

Anybody with even the most basic financial knowledge knows what a savings account is. It's often the first interaction most of us have with a bank. Simply put, a savings account is a secure way to save money. But, beyond being a safe storage mode, a savings account can be a medium to grow your wealth if you know how to use it smartly. Here are some main things you should know about savings bank accounts. 

  • Functionality: A savings account primarily allows users to securely deposit money and earn some interest on the saved amount.
  • The Facility of Earning Interest: Traditional savings accounts have a nominal savings account interest rate, which essentially means you earn a small percentage of money over your saved amount annually.
  • Universal in Nature: The main attraction for these accounts (other than being secured) is that they are universal. Whether you're 18 or 50, the primary functions remain consistent, making them a great financial tool for all ages.

Tips for Young Adults (18-35)

There’s no denying that young adults are at a very important junction in their lives when it comes to finances. They are at the point where their decisions will impact their future financial health. Here, saving money using Fixed Deposits or Kotak Savings Account, which provides FD-like interest on deposits through its ActivMoney feature can be helpful.

  • Prefer Opening Account Online: Starting with the simplest one, begin your financial journey by opening an online account. This ensures your first experience in banking is smooth and from the comfort of your home. 
  • Understand Savings Account Interest Rates: Ensure you're well-versed with how these rates affect your savings, and you can maximise the benefits significantly.
  • Understand the Power of a Compound Interest: Compounding interest rates are your best friend. It allows you to grow your wealth without taking the risks of other financial plans. You must appreciate the importance of letting your savings grow as the interest compounds over time.
  • Look for Youth-centric Banking Products: Look for banks offering products specially tailored for the youth, with benefits like higher transaction limits and exclusive deals. 

Always remember that starting early is vital. The earlier you start, the better the foundation you lay for a stable financial future.

Strategies for Mid-Age Adults (36-50)

If you are in your late thirties to fifties, your financial strategies and goals will most likely be about stability, future planning, and increasing your current assets. A savings account can be key in this planning, especially when you use it wisely. Here are some tips:

  • Check for Competitive Interest Rates: Sign up with a bank that offers the most competitive savings account interest rates to reap the maximum benefits. 
  • Create Emergency Funds: To make sure you have enough rainy-day funds, you should ideally save six months' worth of expenses.
  • Choose the Right Banking Partner: It's important to find a bank that mirrors your financial dreams and provides top-notch services.

Advanced Tips for All Ages

While the basics form the foundation, advancing in the world of savings means diving deeper into strategies that maximise your returns. No matter the age, there are techniques and tools to see your savings grow faster.

  • Shop Around: Before open bank account online, check for the bank, its features and, most importantly, savings account interest rate.
  • High-Yield Savings Accounts: As the name suggests, these accounts are meant to offer higher interests than traditional ones. Explore the option of moving your savings to high-yield accounts. For example – Kotak Mahindra Bank provides a zero-balance savings account, which can be opened online, offering an FD-like interest rate of up to 7% with the ActivMoney feature.
  • Certificates of Deposit (CDs): They are time-bound deposits which, in exchange for keeping your money locked for a specific period, offer a higher interest rate.
  • Fixed Deposits (FDs): If you have idle funds, consider putting them into FDs, which offer higher interest rates with fixed tenures, making them one of the safest savings methods.

Conclusion

From young adults taking their initial steps in the financial world to middle-aged individuals preparing for future ventures, a savings account is the 101 of wealth generation. Remember to start early, stay updated about changing interest rates, and make the most of modern banking tools like online savings accounts.

Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same. The article does not constitute financial advice.

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Published: 28 Nov 2023, 07:05 PM IST
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