Benefits of High-Interest Savings Accounts for Long-Term Goals

The achievement of long-term goals brings a sense of irreplaceable fulfilment. It enables you to live your dream life and provide for loved ones. Strategic planning is crucial for achieving long-term goals. There is a range of banking products and services for this. Successful goal achievement depends on selecting and employing the right banking product wisely.  

A Savings Account is an underrated tool for achieving long-term financial goals. It secures your money while growing it at a competitive interest rate. It also simplifies daily banking.  

There are different Savings Account options, one of which is a high-interest Savings Account. In this blog, we will explain what a high-interest Savings Account is and how it benefits achieving long-term financial goals. 

What is a High-interest Savings Account? 

Let’s start by learning the account basics. 

A high-interest Savings Account has a higher interest rate than the average. Opening such a bank account online helps maximise your savings. 

You earn a competitive interest rate on your account deposits. The Savings Account interest rate varies from one bank to another. Therefore, open an account with a bank offering a higher interest rate than others. Furthermore, the interest rate differs for each type of Savings Account. 

A Regular Savings Account fetches you a standard interest rate. Banks have curated varied Savings Account options. Each account has a unique value proposition.  

As mentioned, the high-interest Savings Account offers a better interest rate. This means the account is a valuable financial tool in every way. It helps you save and grow your money and enables efficient banking. 

Benefits of a High-interest Savings Account for Long-Term Goals  

Following is a mention of simple ways the account helps with long-term goals:  

Maintenance of Minimum Balance 

Achievement of a long-term goal requires discipline. A Savings Account helps instil financial discipline. Having a free hand with money can be dangerous. You may end up in excessive indulgence and even incur debt. You should develop a strong hold over your finances, and opening a bank account online can help. 

A Savings Account requires you to maintain a minimum balance. You are penalised for the non-maintenance of the balance. The burden of penalty discourages unnecessary spending. You responsibly deposit the money in the Savings Account. This supports the fulfilment of your long-term goals. 

Competitive Interest Earning 

Parking your money in a high-interest Savings Account keeps it working. As mentioned, you earn an interest rate on the deposits. Banks consider the account’s average daily balance for interest calculation. The accumulated interest credit takes place every quarter. This means your money grows with no personal effort. This helps in achieving long-term goals systematically. 

Higher Balance, Higher Interest Earning  

Several banks follow a tiered interest rate structure for Savings Accounts. This means they offer a higher interest rate for a higher account balance. You should try to maintain a higher account balance. It will help you qualify for a more competitive interest rate. This way, you can save a significant amount and steadily grow it.  

Generally, banks display comprehensive balance brackets and the interest rate for each range. Consult the bank’s customer executive or refer to their website/ app for all details. Read the interest rate applicability and calculation carefully. Ideally, the bank extends the higher interest rate for the surplus account balance.  

Opt for the Auto-Sweep-In Facility  

The auto-sweep-in facility can support your pursuit of long-term financial goals. This is because it aids in maximising interest earning. 

The auto-sweep in the facility transfers excessive savings account balances to fixed Deposits. This grows your money at the FD interest rate. Usually, the FD interest rate is higher than the Savings Account interest rate. 

Here is a simple example to explain this better: 

• Akash opens a high-Interest Savings Account. 
• The Savings Account interest rate is 4%. 
• Every month he contributes ₹ 30,000 to it. This means his deposit grows at 4%. 
• Let’s assume the account has a threshold limit of ₹ 25,000. 
• This means Akash holds a surplus of ₹ 5,000. 
• Akash opts for the auto-sweep-in facility. 
• The surplus amount of ₹ 5,000 directly gets invested in an FD. 
• Suppose the FD interest rate is 7%. 
• This surplus amount on investment will grow at 7%. 
• This translates to better interest earning for Akash. 
• This will put him in a better position to accomplish his long-term goals. 

Summing It Up

A Savings Account is an overlooked yet powerful banking tool. It helps you secure, save, and grow your money. There are different types of Savings Accounts. The high-interest Savings Account is a popular type. It fetches you a more competitive interest rate. Leverage the account smartly to turn your long-term financial plan into assured success.