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Savings Account

How a savings account can create a second source of income

Key Takeaways

A savings account offers assured returns on the account balance maintained in it.
The returns accumulate over time and can create a second source of income for your financial needs.
The right savings account with monthly interest credits, and high interest rates can maximise your returns.
IDFC FIRST Bank Savings Account prove to be the right choice with attractive interest rate that is one of the bests in industry, monthly interest credits, and rewarding debit cards.

17 Sep 2024 by Team FinFIRST

A savings account is a common financial tool for storing surplus funds. It allows for easy deposits and withdrawals and even allows for investments and redemptions. But did you know that the account can also generate a second source of income?

Yes, you read it right!

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Besides providing you with basic banking services, a savings account also offers guaranteed interest on the account balance. This interest can compound over time and create extra income aka a second source of income for your financial needs. With regular account credits, the interest income can give you funds to meet additional expenses or enhance your investments.

Wondering how the interest mechanism works? Let’s understand with an example.

Average savings account balance - ₹1,00,000

Savings account interest rate - 3% p.a.

Compounding frequency - Monthly

Period - 5 years

Choosing the right savings account for maximum interest income

While all savings accounts offer interest on the balance, choosing the right account can make the difference in the amount earned. Here are some tips to maximise the interest earnings-

Choose an account with the highest interest rate

The savings account interest rate might vary across accounts. Compare the rates and choose an account offering the highest rate for maximum earnings. For instance, IDFC FIRST Bank Savings Account offers competitive interest rates, an attractive proposition in itself, that help you get good returns on your savings.

Check the compounding frequency

When it comes to compounding, the higher the frequency, the higher the returns you can earn. These returns can then become your second source of income ensuring you’re never short on money.

For instance, compared to annual compounding, quarterly compounding yields higher returns. Similarly, monthly compounding is much better than quarterly compounding for providing higher returns on your savings account balance.

Look for accounts offering monthly interest credits or monthly compounding frequency for maximum returns.

Assess the fees and charges

The fees and charges associated with the savings account are also important, as they tend to reduce your returns.

Know the balance requirements

Lastly, know the average balance requirement of your chosen savings account. Non-maintenance of the average balance might incur charges, reducing the effective returns. As such, knowledge of and maintaining the minimum average balance requirements is essential. Choose an account whose balance requirement is affordable so you can maintain it without affecting your budget or finances.

How to save and earn more?

While the right savings account can maximise the interest income, the interest will depend on the account balance. What does the account balance depend on?

Your ability to save. So, here are some strategies that can help you save more so that you can maintain a good account balance for higher interest earnings -

Assess your expenses and cut down on unnecessary ones. For instance, if you are spending too much on eating out, try reducing the frequency and opt for home-cooked meals instead
Create a budget at the start of the month and stick to it. Do not overspend
Look for deals and discounts when shopping. Utilise them to save on your transactions
Also, keep an eye out for cashbacks, as they can help you save on your purchases and payments
Do not default on your loans or credit card bills. They will incur interest, which will be an added expense and eat into your savings

Generate passive income with IDFC FIRST Bank Savings Account

IDFC FIRST Bank Savings Account can be the right financial partner for creating a second source of income. Besides the attractive interest rate, the account offers a host of other benefits which help maximise your returns. Have a look -

Monthly interest credits increase the compounding frequency for higher returns
You get a rewarding debit card that offers a range of discounts and cashbacks across merchants
Earn loyalty points on using your debit card for your purchases and redeem the points for attractive e-vouchers

With an IDFC FIRST Bank Savings Account, you can save more and use the extra income to meet varied expenses.

Save more = earn more - grow more

Choose the right savings account and do more with it than banking. Use the account smartly and create a second source of income with the interest earned on your account balance. Accumulate the interest through compounding and use it for your financial needs.

Pave your way to financial stability and growth, and when you have an IDFC FIRST Bank Savings Account, the journey will become easier.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.