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Alternatives to A Savings Account You Can Benefit From

  • Highlights

  • Best investment options in India include FDs, liquid funds, and gold

  • Company FDs provide 1-2% higher returns than bank FDs.

  • Returns on most investments are linked to market fluctuations and inflation indices

  • You can ladder multiple FDs using multi-deposit facility

When it comes to parking excess money, traditional passbook savings accounts were usually the most preferred options. However, with interests hovering around the 3%–5% mark per annum, there is a need to consider better alternatives.

The ease of depositing and withdrawing money at your will, led to the popularity of savings accounts. Today there are several better options, which offer the same convenience and features at a better rate of interests.

Various Alternatives to a Savings Account

Check out these profitable alternatives to the traditional savings account, where you can put your money to work for you:

  • 1. Liquid Funds

  • 2. Payments Banks

  • 3. Fixed Deposits

  • 4. Gold

1) Liquid funds

Liquid funds come across as one of the best options for savings. These are debt mutual funds where you invest in short-term, government debt instruments like treasury bills, government securities and call money that pose least risk.

Some of the benefits of liquid funds are:

  • i) Higher returns with attractive interest rate

  • ii) Greater safety and liquidity, which make them ideal for emergency funds

  • iii) Re-invest in other financial instruments and maximize your savings accounts

With liquid funds, you can look for greater safety and better liquidity. These can certainly, be high-return alternatives to savings accounts.

Additional Read: Best Saving Schemes in India

2) Payment banks

Payment banks, such as the India Post Payments Bank, are new entrants in the non-banking financial companies (NBFCs) category. As compared to a savings account, an account in a payments bank is a zero-balance account by default.

By investing in payment banks, you can gain the following benefits:

  • i) There is no penalty for non-maintenance of balance in payments bank account

  • ii) Wide distribution network for easy accessibility

  • iii) Greater convenience with these facilities:

    • a) Cash withdrawal from ATMs

    • b) Request a chequebook

    • c) Balance alerts on mobile

  • iv) Enhanced customer services with discounts and cashbacks

Investors can deposit a maximum of Rs.1 lakh with such payment banks. Like traditional banks, payment banks also offer value-added services to their customers.

3) Fixed deposits

If your goal is to use your savings for wealth maximization, fixed deposits are your best bet.

Parking your idle money or surplus cash in fixed deposits is a step towards wealth maximisation. Since your money is parked in a bank for a fixed tenor, FDs fetch a higher rate of interest compared to a savings account.

Company FDs are even better than bank FDs as they pay 1-2% higher interest than bank FD. You can also create multiple FDs at various intervals to achieve a result of constant stream of maturing of FDs. This is called as Laddering. It helps create a bridge between regular expenses and big-ticket expenses that might keep cropping up. Fixed deposit is a versatile instrument which allows you to choose different tenors. You can choose from 12 months to 60 months and ensure that all your FDs are flexible and provide liquidity.

Additional Read: 5 Best Short-Term Investment Schemes To Make Money

The interest on FDs can go higher, depending on the type of fixed deposit, duration and the financial institution. Investing in fixed deposit is more rewarding, especially as you can expect an appreciation of your funds.

4) Gold

The precious yellow metal has always lured investors. Despite fluctuations in prices, gold has proven itself to be a stable and safe investment. There are different ways in which you can buy gold and so, it does not mean buying the metal itself. You can also buy gold by investing in gold exchange traded funds (ETFs) or buying shares of a company that mines gold.

Since the world accepts gold, you can cash it easily. In periods of inflation, the value of gold increases, and has proven to be far more stable than several other financial instruments.

High Yielding Alternatives

In the current interest rate scenario where rates are falling due to Repo rate cuts, investments with companies like Bajaj Finance can earn FD interest rates up to 8.35% for a 5-year FD if you are a new customer and 8.7% if you are a senior citizen. Also, on an FD of Rs 25,000 which is the minimum investment required, you can grow your capital by 49%, as a new investor. Senior citizens can grow their capital by 51%, by investing in a Bajaj Finance FD.

Bank fixed deposits will earn you interest rates 5.5% to 7.5% depending upon the tenor. Longer tenors on the lines of five years or more will earn you higher interest, but your need for the money might arise much earlier. Alternatively, you can consider FDs with short tenors.

Bajaj Finance FDs also offer additional benefits, such as –

  • Flexibility- You have the flexibility of either going for a cumulative option where you can take periodic interest payouts or a non-cumulative one – where interest will be reinvested each year as an addition to the principal. Using these combinations can earn you a handsome corpus at maturity.

  • Multi-deposit facility- You can create multiple FDs with a single lumpsum amount using this facility. All FD accounts can be managed online using Experia- your online FD account.

  • Online loan against Fixed Deposit- iquidity is the key in case of emergencies, and it is painful to liquidate your investments for it. Instead, opt for an instant online loan against fixed deposit, where you can take a loan at a marginal rate of interest, over and above your FD interest rate.

  • Creating FDs using debit card - You can easily invest in FDs using a debit card.

  • Auto-renewal facility - To not miss out on high rates, opt for auto-renewal feature while investing in FDs to ensure hassle free renewal.

Bajaj Finance FDs are known to provide stable and guaranteed returns with CRISIL’s FAAA/Stable rating and ICRA’s MAAA (stable) rating, so your investments are never at risk. If you wish to earn higher returns with flexibility going for a company FD like Bajaj Finance FD will serve your purpose the best.

You can easily grow your savings by choosing to invest in a smart investment avenue, which offers higher returns on your investment capital. Amid increasing market volatility and reducing interest rate regimes, it is best to invest in a smart investment option like fixed deposits, which offer high stability and flexibility.

Additional Read: How FD is better than Savings Account?

DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.

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