Savings accounts are an essential part of personal finance management. They offer multiple benefits, such as convenient fund transfers, liquidity, safety of funds, and a guaranteed interest rate.
While savings accounts offer security, they often pay nominal interest rates. When you keep a substantial surplus amount in your savings account, you can miss out on opportunities to earn higher interest. Inflation also erodes the purchasing power of your money and reduces your savings’ value over time. So, what steps can you take to increase the value of your savings account? Using the ActivMoney facility in savings accounts is one effective way to achieve this.
Here’s how the ActivMoney facility helps you earn more interest on savings accounts
- Higher interest earnings
An ActivMoney savings account offers an opportunity to earn a higher interest rate on your surplus funds. Unlike a regular savings account, where the interest rate may be nominal, the funds swept into the FD through ActivMoney enjoy better interest rates. This means your money can grow at a faster rate and contribute to your savings goals more effectively.
Note that both the Fixed Deposit (FD) and savings account balance earn interest at their respective rates.
- Auto sweep facility
ActivMoney operates on an auto sweep mechanism, which means you don’t need to worry about manually transferring funds to an FD. Whenever your savings account balance exceeds the predefined threshold, the excess amount is automatically swept into the FD for a specified tenure (usually 180 days). This seamless automation eliminates the need for constant monitoring and ensures that you never miss an opportunity to earn higher interest.
- Liquidity and flexibility
Although regular FDs typically have a lock-in period, auto sweep FDs created through ActivMoney offer liquidity and flexibility. In case you require funds urgently and your savings account balance is insufficient, the FD is broken prematurely, and the required amount is transferred back to your account without any penalties. This feature gives you 24/7 access to your funds without any penalties on premature withdrawals while earning FD-like interests.
- Capital preservation
The principle amount in your FD remains protected and secure, just like in a regular FD. The only difference is that you benefit from a better interest rate, which enhances the growth of your savings over time. This approach helps you strike a balance between risk management and wealth accumulation.
- Customisable threshold and tenure
Each individual’s financial needs and goals may differ. Therefore, most banks give you the flexibility to set your own threshold amount and FD tenure as per your preference and financial circumstances. This customisation allows you to align the ActivMoney facility with your specific savings objectives.
Maximise your savings account returns with the ActivMoney facility
The ActivMoney feature offers a smart way to earn more interest on your savings account without incurring any extra charges or fees. By enabling the automatic transfer of idle funds to an FD, the facility maximises your returns on savings and minimises the risk of idle money losing value over time.
To benefit from ActivMoney, check with your bank to confirm if they offer this feature. Some banks might term it as Auto sweep savings accounts, while others use the name ActivMoney. If your current bank doesn’t provide this facility, open a savings account with one that offers this feature to make the most of your savings. Now enjoy the best of both worlds, FD-like interest rates and accessibility of a savings account.