SA with high interest rates or a bank FD?

[NikhilG]

I'm trying to decide between a decent savings account with a high interest rate(playing out with slabs to see which bank starts giving their max internet rate within lowest slab) vs creating bank fds and foregoing flexibility but getting extra roi.
This is in regard of parking several lakh, but I don't really when I could require it so I would love that flexibility but my track record shows that even I have been using my savings account until now to park that money, I never really took out that money for many years. I feel bad 🤔 I could have rather created a fd but I have done the maths and I feel more comfortable if I get 7.5 percent in sa then a fd of 8 percent.
But there is a catch and that is slabs in savings account, example rbl starts giving 7.5 percent after 25 lacs so my first 25 lacs will earn according to various slabs and I lose lot of interest amount on that.
My question is if I park money in small finance bank, and it's a saving account so isn't risk well controlled as if I get some news bank is not performance one click and I can move everyone out of savings account or is it not worth the risk,
Also what wins the game these days high roi savings account or old school fd?

 

[John Since]

I'm trying to decide between a decent savings account with a high interest rate(playing out with slabs to see which bank starts giving their max internet rate within lowest slab) vs creating bank fds and foregoing flexibility but getting extra roi.
This is in regard of parking several lakh, but I don't really when I could require it so I would love that flexibility but my track record shows that even I have been using my savings account until now to park that money, I never really took out that money for many years. I feel bad 🤔 I could have rather created a fd but I have done the maths and I feel more comfortable if I get 7.5 percent in sa then a fd of 8 percent.
But there is a catch and that is slabs in savings account, example rbl starts giving 7.5 percent after 25 lacs so my first 25 lacs will earn according to various slabs and I lose lot of interest amount on that.
My question is if I park money in small finance bank, and it's a saving account so isn't risk well controlled as if I get some news bank is not performance one click and I can move everyone out of savings account or is it not worth the risk,
Also what wins the game these days high roi savings account or old school fd?

If you don't want to go thru the hassle of opening multiple bank accounts just to earn some interest according to the slab rates which are lower and some SFB's provide 5% on first slab which is also relatively lower, then I suggest you to park those funds in some liquid fund which can be redeemed in single day and zero risk. There are platforms which even facilitate instant redemption of liquid fund upto Rs.50K per AMC. You can check this out. Opening bank accounts every now and then to earn lesser returns than liquid fund is a waste of time. After almost 2 years of moving funds here and there between various banks, telling this from my experience.

 

[NikhilG]

If you don't want to go thru the hassle of opening multiple bank accounts just to earn some interest according to the slab rates which are lower and some SFB's provide 5% on first slab which is also relatively lower, then I suggest you to park those funds in some liquid fund which can be redeemed in single day and zero risk. There are platforms which even facilitate instant redemption of liquid fund upto Rs.50K per AMC. You can check this out. Opening bank accounts every now and then to earn lesser returns than liquid fund is a waste of time. After almost 2 years of moving funds here and there between various banks, telling this from my experience.

Liquid funds will just give max 6 percent, with bank I might get 7.75 percent as well maybe with slab adjustment say collective of 7.25 percent still better ?

 

[John Since]

Liquid funds will just give max 6 percent, with bank I might get 7.75 percent as well maybe with slab adjustment say collective of 7.25 percent still better ?

Last 3yr CAGR is around 7% with no TDS hassle. BTW which reputed bank provide 7.75% on savings given you want to park in lakhs? Only above Rs.10 lakhs you get 7.25% which will average out in liquid fund on first 10 lakh slab.

One more option is Gilt Funds given the scenario of reducing repo rates since last one year. I park my funds in Gilt fund which gave me 11-12% in last one year with no risk as they are govt bonds.

 

[Guddi]

I'm trying to decide between a decent savings account with a high interest rate(playing out with slabs to see which bank starts giving their max internet rate within lowest slab) vs creating bank fds and foregoing flexibility but getting extra roi.
This is in regard of parking several lakh, but I don't really when I could require it so I would love that flexibility but my track record shows that even I have been using my savings account until now to park that money, I never really took out that money for many years. I feel bad 🤔 I could have rather created a fd but I have done the maths and I feel more comfortable if I get 7.5 percent in sa then a fd of 8 percent.
But there is a catch and that is slabs in savings account, example rbl starts giving 7.5 percent after 25 lacs so my first 25 lacs will earn according to various slabs and I lose lot of interest amount on that.
My question is if I park money in small finance bank, and it's a saving account so isn't risk well controlled as if I get some news bank is not performance one click and I can move everyone out of savings account or is it not worth the risk,
Also what wins the game these days high roi savings account or old school fd?

SBI has this Savings Plus account where the surplus amount above a threshold is moved to FD. I think few other banks also have this feature, not sure which.

 

[Trust Me]

SBI has this Savings Plus account where the surplus amount above a threshold is moved to FD. I think few other banks also have this feature, not sure which.

What you are suggesting are sweep out - sweep in accounts which are usually a bad idea for customers (and a lucrative one for banks). Depending on the circumstances one could end up earning even less than savings accounts!
.

 

[Anindya98]

I'm trying to decide between a decent savings account with a high interest rate(playing out with slabs to see which bank starts giving their max internet rate within lowest slab) vs creating bank fds and foregoing flexibility but getting extra roi.
This is in regard of parking several lakh, but I don't really when I could require it so I would love that flexibility but my track record shows that even I have been using my savings account until now to park that money, I never really took out that money for many years. I feel bad 🤔 I could have rather created a fd but I have done the maths and I feel more comfortable if I get 7.5 percent in sa then a fd of 8 percent.
But there is a catch and that is slabs in savings account, example rbl starts giving 7.5 percent after 25 lacs so my first 25 lacs will earn according to various slabs and I lose lot of interest amount on that.
My question is if I park money in small finance bank, and it's a saving account so isn't risk well controlled as if I get some news bank is not performance one click and I can move everyone out of savings account or is it not worth the risk,
Also what wins the game these days high roi savings account or old school fd?

Open Unity Small Finance Bank account

 

[NikhilG]

I

Last 3yr CAGR is around 7% with no TDS hassle. BTW which reputed bank provide 7.75% on savings given you want to park in lakhs? Only above Rs.10 lakhs you get 7.25% which will average out in liquid fund on first 10 lakh slab.

One more option is Gilt Funds given the scenario of reducing repo rates since last one year. I park my funds in Gilt fund which gave me 11-12% in last one year with no risk as they are govt bonds.

I'm talking of upwards of hundred lakhs

 

[NikhilG]

Open Unity Small Finance Bank account

So every small finance bank is equally safe?

 

[NikhilG]

Last 3yr CAGR is around 7% with no TDS hassle. BTW which reputed bank provide 7.75% on savings given you want to park in lakhs? Only above Rs.10 lakhs you get 7.25% which will average out in liquid fund on first 10 lakh slab.

One more option is Gilt Funds given the scenario of reducing repo rates since last one year. I park my funds in Gilt fund which gave me 11-12% in last one year with no risk as they are govt bonds.

Rbl gives 7.50 percent over 25 lacks and once you have been above that limit the whole amount after 1 lac would attract that 7.5 percent (which they are changing from may 1) that's why this reshuffling from my side

 

[John Since]

With that big an amount, will you face safe parking them with small finance banks which are new?
I would trust fund houses like SBI, HDFC, UTI, ICICI, Kotak etc to park such funds with them which is anyday better than parking them with some newly incorporated banks. This is my view.

I'm talking of upwards of hundred lakhs

 

[NikhilG]

Open Unity Small Finance Bank account

Can I open full kyc account online or need to visit bank?

 

[John Since]

Can I open full kyc account online or need to visit bank?

You can open it online. Unity small finance bank is incorporated by taking over a failed bank called PFC bank of maharastra and no physical branch support across the country mostly. In case of account freezes, you will be going through a hassle.

 

[NikhilG]

With that big an amount, will you face safe parking them with small finance banks which are new?
I would trust fund houses like SBI, HDFC, UTI, ICICI, Kotak etc to park such funds with them which is anyday better than parking them with some newly incorporated banks. This is my view.

Be it any bank, would not collapse in a day you can monitor the progress of the bank and if you have had a doubt one click and you can transfer all your money. That's a beauty of savings account. Maximum liquidity!
I know what I'm talking, YES vala hun 😁

 

[Anindya98]

So every small finance bank is equally safe?

No, you have to do your research.