Why you should have Savings account in small finance banks? Here are a list of five such banks

Savings account interest rates can play a crucial role in determining where individuals choose to keep their money. Typically ranging between 7% and 7.5%, these rates vary depending on the account balance and the type of bank one selects.

Small finance banks are known for offering higher interest rates on savings accounts compared to traditional banks. The interest is calculated daily based on the balance at the end of each day and is paid out quarterly. This means that the more money kept in the account, the higher the potential interest earned.

For added security, the Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance coverage for most small finance banks. This coverage extends to all types of deposits, including savings, fixed, current, and recurring accounts. Each depositor is protected up to Rs 5,00,000 for both the principal and interest amounts held in the same right and capacity.

Several small finance banks are currently offering competitive savings account interest rates between 7% and 7.5%. Here are five such banks:

1. Ujjivan Small Finance Bank: Ujjivan offers interest rates ranging from 3.50% to 7.50% on different deposit amounts. As of June 1, 2023, the bank provides 7.50% interest on savings deposits exceeding Rs 25 crore.

2. Jana Small Finance Bank: Jana's interest rates vary between 3.50% to 7.50% based on the deposited amount. The highest rate of 7.50% is applicable for savings deposits above Rs. 10 crores up to Rs. 50 crores.

3. Unity Small Finance Bank: Unity Bank offers interest rates from 6% to 7% on varying deposit amounts. For savings accounts, the bank provides 7% interest per annum for deposits exceeding Rs 1 lakh and 6% interest for deposits up to Rs 1 lakh.

4. Equitas Small Finance Bank: Equitas SFB offers different rates depending on the account balance. It offers 3.50% interest on balances up to Rs 1 lakh, 5.25% on balances above Rs 1 lakh to 5 lakhs, 7% on balances above Rs 5 lakh, and 7.50% on balances exceeding Rs 50 crores. The rates were effective from July 12, 2023.

5. Suryoday Small Finance Bank: Suryoday offers interest rates between 3.75% to 7% on various amounts. As of March 1, 2023, the bank provides 7% interest on savings deposits above Rs. 5 lakh up to Rs. 2 crore.

These interest rates offer potential growth for savings, making small finance banks an attractive option for those looking to maximize their earnings while ensuring the safety of their deposits. However, it is essential for individuals to carefully review the terms and conditions and compare different banks before making their decision.