Best savings bank account to park 5-10L(emergency fund)

[ankitfintech]

Hi,
I want to open a savings bank account to park my emergency funds(5-10L). Which is the best bank account to open for this reqmt?

I have recently opened a ICICI salary account. Earlier my salary account was in Citibank which has now become savings account. Plus I also have BoB savings account. Will be closing Citibank account once I open new savings bank account.

I am thinking to open a Axis Burgundy account primarily due to the Burgundy Debit Card and also LtF Axis Select(which I may try to convert to Magnus). Are there any other bank accounts which have similar or better features?

 

[Chaitanya-a]

You can try IDFC Wealth account with 10L initial deposit. Negotiate this with your branch wealth RM beforehand while opening account that he'll initiate upgradation to Wealth account within 1 week after normal account opening. Otherwise you'll withdraw your funds.

In IDFC, you don't have to keep that amount after upgradation. Whereas in Axis, it is mandatory to keep 75% of funds to be in Burgundy category. Also IDFC gives higher interest with monthly payout.

 

[saucy]

If services aren't absolutely essential metrics for you
Check out RBL bank premium accounts (aspire/signature)

They're 0 amb, and give 5.5% interest rate above 1L

There are banks that give higher interest rate, but mostly they're SFB. So I'd not recommend them.

If you're certain that off of this 10L , let's say you'd need 5L ekdam immediately, but 4 L ek din me milega to bhi chalega, you could consider putting it in liquid/short term funds.
The rest 1L that you want to be accessible but might not need - put in FD @ 7% - break in case of emergency

Why short term and not FDs -- FDs can be broken in seconds -- but when they break, they don't give you *ANY* interest. Short term take 2 days to redeem, but give similar/better interests

Plan your investments accordingly

 

[tdot]

If services aren't absolutely essential metrics for you
Check out RBL bank premium accounts (aspire/signature)

They're 0 amb, and give 5.5% interest rate above 1L

There are banks that give higher interest rate, but mostly they're SFB. So I'd not recommend them.

If you're certain that off of this 10L , let's say you'd need 5L ekdam immediately, but 4 L ek din me milega to bhi chalega, you could consider putting it in liquid/short term funds.
The rest 1L that you want to be accessible but might not need - put in FD @ 7% - break in case of emergency

Why short term and not FDs -- FDs can be broken in seconds -- but when they break, they don't give you *ANY* interest. Short term take 2 days to redeem, but give similar/better interests

Plan your investments accordingly

If you liquidate FD you still get interest for the holding period minus 1% penalty (usually 1%) so it makes sense to still go with FD

 

[jade]

Liquid mutual funds are a good option too. The YTM is around 6 to 7%. Better than saving interest rates.

 

[ankitfintech]

With the recent tax changes for debt mutual funds bringing them on par with savings/FD interest, I don't see much advantage of putting money in liquid mutual funds. Liquid MFs provide on an average 6% returns in a year and savings may give 5% in some bank accounts. If we conder 5L as the amount, bank accounts will 25K and debt mutual funds will give 30k so a difference is 5k only. While I agree liquid MFs are good in general for emergency funds but in my case I am sure I will need the money in next 6 months.
This difference of 5K comes up with additional hassle of choosing correct liquid MF(should not become like Franklin Templeton story). Plus ITR becomes more difficult. This 5k can be covered up by choosing a better savings account which offers benefits more than 5k. Axis burgundy debit card provides 4 Movie(500*4) and 4 Non-movie tickets(1000*4). So technically I can get this 5k difference in a single month.
For 10L, I can get it technically in 2 months. So even if my utilization rate is very poor for these vouchers, I think I can definitely use 5k/10k worth of vouchers in a year.

 

[saucy]

If you liquidate FD you still get interest for the holding period minus 1% penalty (usually 1%) so it makes sense to still go with FD

Yes however, to add to the technicality - that 1% is not as per your booked FD rates, rather it's on the FD rates for the time period that it sits in your bank.

So essentially if you book your FD at 7%
But break it within 6 months(upto a year), the interest you'd get is that of an FD for 6 months, minus 1%
Which usually is the same as the savings rate.

Thus, either get a liquid fund, or a bank with good savings interest rates.

 

[Wealth is my birth right!]

Hi,
I want to open a savings bank account to park my emergency funds(5-10L). Which is the best bank account to open for this reqmt?

I have recently opened a ICICI salary account. Earlier my salary account was in Citibank which has now become savings account. Plus I also have BoB savings account. Will be closing Citibank account once I open new savings bank account.

I am thinking to open an Axis Burgundy account primarily due to the Burgundy Debit Card and also LtF Axis Select(which I may try to convert to Magnus). Are there any other bank accounts which have similar or better features?

Burgundy will be a great choice
Don’t opt for any SFB for this bulky amount
Liquid funds if u wish then pls be educated for impact of indexation too

 

[4uziaul]

I have a suggestion for the OP. Yesterday, I was reallocating some of my father's funds to different banks as he is retired and wishes to enjoy a peaceful life without the headaches associated with other forms of investments.

With IndusInd, you can create a FD, and if you break it anytime, you won't have to pay any penalty on the interest. I can confirm this because we did it yesterday for my father. He wanted to change the payout, and even though the bank employee said it might take a few hours to a day, it only took one hour for the amount to be returned to my father's account.

You can also try this option, which a RM from Bandhan Bank suggested to my father. Saucy also recommended it. You can split your amount, creating multiple FDs. In case of an emergency, if you break one FD, the others will still be earning interest. Among these three banks, IndusInd, RBL, and Bandhan, you can consider IndusInd. As I mentioned earlier, they don't charge any penalties if you break your FD anytime. Additionally, all three banks offer good FD rates.

 

[ankitfintech]

>Liquid funds if u wish then pls be educated for impact of indexation too
Are you talking about indexation for taxation purpose ?

With the new taxation changes for debt mutual fund, there will be no indexation applicable to profits in debt mutual fund case. Everything will be added to your current income and taxed as per your slab bringing debt mutual funds in parity to FDs/saving interests etc.

 

[sauravkumar]

>Liquid funds if u wish then pls be educated for impact of indexation too
Are you talking about indexation for taxation purpose ?

With the new taxation changes for debt mutual fund, there will be no indexation applicable to profits in debt mutual fund case. Everything will be added to your current income and taxed as per your slab bringing debt mutual funds in parity to FDs/saving interests etc.

Absolutely Right!!

If someone is still saying Liquid Fund then he is on another planet!!

He has just listened the Budget speech not the amendments which the govt cleverly did on the very last night of session.!!

 

[shashank08]

Liquid funds are now a days not giving that much great returns..
This is the current returns of liquid funds. I have mentioned the highest return in the category
1 Month - 0.55%
3 Months - 1.88%
6 Months - 3.53%
1 year - 6.56%

IMO one need not to go beyond 1 year in liquid funds.
Debt funds comes with their own risks.. higher the timeframe higher will be the risk.

Presently having FDs are better in terms of returns and if you choose any SFB then you can get higher return as well..
Like Unity SFB is giving almost 8.75% for an FD from >6 months to 201 days which far better than any liquid fund and that is also risk free up to 5 lakh.

So better to choose FD as FDs are giving better rates without any risk as compared to debt funds.

PS: I have bitten by Franklin fiasco and that was also in Ultra Short term fund.. So I understand the risk which comes with debt funds..

 

[Trust Me]

With IndusInd, you can create a FD, and if you break it anytime, you won't have to pay any penalty on the interest......

The funny thing is, IndusInd don't give this in writing! Their FD T&C does specify a penalty clause. So one can't argue with them if they do charge a penalty!

....even though the bank employee said it might take a few hours to a day, it only took one hour for the amount to be returned to my father's account.

I'm surprised! If one breaks an FD with them online, it takes less than a minute, -- not hours!

Anyway, an IndusInd FD would start to be better than a Bandhan SB only for tenures > 6 months.

A Bandhan SB account will yield between 5.4% for 5L to 5.7% for 10L.

An SFB FD is not a good idea for emergency funds even if it is safe upto 5L. If the SFB is in trouble, the money might not be accessible for an extended period of time!

 

[rp0703]

Hi,
I want to open a savings bank account to park my emergency funds(5-10L). Which is the best bank account to open for this reqmt?

I have recently opened a ICICI salary account. Earlier my salary account was in Citibank which has now become savings account. Plus I also have BoB savings account. Will be closing Citibank account once I open new savings bank account.

I am thinking to open a Axis Burgundy account primarily due to the Burgundy Debit Card and also LtF Axis Select(which I may try to convert to Magnus). Are there any other bank accounts which have similar or better features?

Open Kotak 811 Full KYC account. Active ActivMoney feature by visiting branch or Calling CC. ActivMoney is Sweeping facility where money above certain threshold converted into FD of 180 days. In kotak you'll earn 7% for 180 days FD. Also no penalty for premature withdrawal.

 

[Walter White]

Using BoB to park my excess funds under Tiranga scheme FD which gives 7.25%.

 

[4uziaul]

The funny thing is, IndusInd don't give this in writing! Their FD T&C does specify a penalty clause. So one can't argue with them if they do charge a penalty!

I'm surprised! If one breaks an FD with them online, it takes less than a minute, -- not hours!

Anyway, an IndusInd FD would start to be better than a Bandhan SB only for tenures > 6 months.

A Bandhan SB account will yield between 5.4% for 5L to 5.7% for 10L.

An SFB FD is not a good idea for emergency funds even if it is safe upto 5L. If the SFB is in trouble, the money might not be accessible for an extended period of time!

It seems that it's entirely at the bank's discretion whether they choose to apply the penalty or not. Considering the significant amount involved, I'm confident they wouldn't have any issues providing a written assurance that the penalty won't be applied.

In my situation, it was handled through a phone call, and it appears that the RM took their time to break the FD. It's reassuring to know that the same process can be done online, and the funds will reflect in the account within minutes.

 

[imdjay]

What about Sweep-in FDs? Are they any good?
Different terms in different Banks.

 

[codenerd]

I use Mobikwik Xtra where I get 12% pa fixed. Its a p2p and hence a bit risky as compared to normal banks but I park my 2-5 lakhs there only and have been doing it since almost a year and no issues till date! If I withdraw money after 12 am midnight, I get it in few hours next day!

 

[jade]

In terms of taxation there is a parity between debt funds and FDs/saving interest. However, there is one major difference. Tax is applicable on FD/saving interest every year, on the other hand, tax is applicable on debt funds, only when you withdraw the money.

 

[NikhilTravelLover]

Stand Chartered is also an option.