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How to keep cash at bank for better interest

Keeping cash in hand is the necessity of every Indian as in case of any emergency or routine expenses. But the ratio of keeping cash in hand and keeping cash at bank is confusing as sometimes we need less cash in hand and sometime more. 

ATMs have also changed the game as one imagines cash at saving account is same as cash in hand due to liquidity. One can withdraw cash anytime from the ATM, so it is more or less treated as cash in hand more by youth.

One always needs to make a ratio of cash in hand and cash at bank. The reason is if more cash at bank, one has to suffer of cash scarcity in emergency and more cash in hand can lead to loss of interest.

Saving bank account doesn’t offer any great rate of interest. It may be 4-6% depending on banks. Some banks offer 6% rate of interest on the account balance more than 1 lakh rupees.

There is another plan which called flexi account. In this account one will get the same rate of interest as fixed deposit offer in the saving account balance. In Flexi account, the bank will give FDR rate of interest on the amount above the minimum requirement of the account. For example, if one has the saving bank account with ICICI bank and the balance is 40000 rupees. The minimum requirement is 10000, so one will get rate of interest of fixed deposit on 30000 rupees for the tenure of keeping money in the account. One can withdraw the money anytime as the money is in saving account only.

The drawback of this scheme is the tenure. Fixed deposit offers different rate of interest on different tenure and the minimum rate of interest on the less than 1 month tenure. It around 5%, so if one keeps the money less than 1 month, he will get less interest on flexi deposit than some banks offer on saving account.

Unfixed deposit
This is the latest and productive deposit offered by some banks. In this deposit, one will get the 1 year rate of interest of fixed deposit on the money provided in the account minimum of 7 days. The liquidity is the same as saving account as one can withdraw the money anytime.

This offer leads to a different type of competition among banks. Some are offering better rate of interest whereas some are offering better liquidity and offer to exit.

Like State bank of India offers 8-9% rate of interest on unfixed deposit.  Standard chartered bank offers 8% rate of interest on e-saver plus saving account with the condition of 3lakh rupees minimum requirement. ING vysya bank offers 9.25% on its FD plus deposit account on minimum balance of 100000 rupees. Some banks already offers 5.5-6% rate of interest on saving account but YES bank recently offering 7% rate of interest on saving account.

This competition is only benefit to the peoples of India. Happy banking.
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