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Alternatives to A Savings Account You Can Benefit From

  • Highlights

  • Airtel Payments Bank offers 7.25% & India Post Payments Bank offers 5.5% interest.

  • FD Interests depend on type, duration and financier

  • Inflation increases value of gold, proving gold investments more stable

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.

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

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.

According to Business Today, while the former earns interest of 3.5%–4%, the Airtel Payments Bank offers 7.25% and the India Post Payments Bank offers 5.5% interest.

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.
Here are 5 reasons that make FDs better than savings accounts:

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.

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.

Difference between Cumulative and Non Cumulative

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.

Adopting these investment instruments will give you better returns on the sum that you invest. If you’re leaning towards a fixed deposit, pick an High Fixed Deposit Interest Rates, excellent stability and greater flexibility.

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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