Salary Account Interest Rates Explained: What Every Saver Needs To Know

A salary account is the backbone of financial management for many working individuals. It is basically a type of savings account but with certain distinct features. Banks offer salary accounts to employees as part of corporate tie-ups with companies. Your employer directly credits your monthly salary into this account, and from there, you can use it to handle your expenses, transfer funds, or even save for the future.

Your salary account can also serve as a tool for growing your savings through interest earnings. But how do these interest rates work? What should every saver know about maximising their earnings from a salary account? Let’s break it down.

How do interest rates work on salary accounts?

Banks usually calculate interest on a daily balance basis. Simply put, the interest earned is computed on the amount of money that remains in your salary account at the end of each day. The cumulative interest is then credited monthly, to your bank account.

Why do salary account interest rates matter?

Interest rates on salary accounts matter for several reasons:

Passive income: The interest earned on the deposited balance can be a great way to increase your savings passively.

Inflation hedge: Even though the interest rate may not completely offset inflation, it helps your savings grow and lessen the impact of rising costs over time. Your hard-earned money maintains more of its purchasing power compared to lying idle as cash or in a low interest saving account.

Emergency fund: You can use your salary account as an emergency fund due to the 24/7 liquidity it offers. You can deposit a sizable balance, earn interest on it, and have the convenience to access funds whenever needed.

Tips to maximise your salary account interest earnings

To make the most out of your salary account, take note of the following tips:

Choose a premium salary account

Opting for a premium account like the IDFC FIRST Bank Digital Salary Account can boost the growth of your savings with the best interest rate in the industry. Besides a competitive rate, here are more value-added benefits you enjoy:

- No fees for critical services like IMPS, RTGS, and SMS alerts
- Enjoy monthly interest credits to grow your savings faster
- Unlimited ATM withdrawals at no extra cost
- Access more than 250+mobile banking services through a dedicated mobile app
- Complimentary insurance coverage, including air and personal accident insurance
- 24/7 customer support to fulfil all your banking needs

Look for a zero-balance facility

The IDFC FIRST Bank Salary Account offers a zero-balance facility, which means you can use your funds freely without worrying about penalties for low balances. Most importantly, you still earn high interest on whatever balance you maintain.

Maintain a higher balance

The more you leave in your account over time, the more you stand to earn through interest. So, rather than dividing your savings across multiple accounts, try to consolidate your funds into a single salary account with a high interest rate.

Utilise salary bonuses wisely

When you receive bonuses or incentives from your employer, try not to spend them right away. If possible, consider keeping these extra funds in your salary account for a while to enjoy higher interest earnings and earn more passive income.

While the major purpose of a salary account is to receive your monthly salary, the interest earned offers high liquidity, convenience, and useful perks that are hard to ignore. By knowing how it’s computed and practicing smart financial habits, you can make the most of your salary account.

To benefit from high interest rates, unlimited ATM transactions, exclusive loan offers, premium digital solutions, and much more, consider the IDFC FIRST Bank Salary Account. You can easily apply for this account online and feel confident that your savings will grow every month.