Savings Account Interest Calculator
Calculate how much interest you will earn on your savings account balance over time. In India, savings account interest is calculated daily and credited quarterly.
Investment Details
Total Principal
₹3,50,000
Total Interest
+₹43,496
Total Balance
₹3,93,496
Balance Growth Over Time
Year-wise Growth Schedule
| Year | Total Principal | Interest Earned | Total Balance |
|---|---|---|---|
| Year 1 | ₹1,10,000 | ₹3,342 | ₹1,13,342 |
| Year 2 | ₹1,70,000 | ₹9,256 | ₹1,79,256 |
| Year 3 | ₹2,30,000 | ₹17,847 | ₹2,47,847 |
| Year 4 | ₹2,90,000 | ₹29,223 | ₹3,19,223 |
| Year 5 | ₹3,50,000 | ₹43,496 | ₹3,93,496 |
How is Savings Account Interest Calculated in India?
As per the Reserve Bank of India (RBI) guidelines, interest on savings bank accounts is calculated on a daily basis on the closing balance in the account. However, the accumulated interest is typically credited to the account on a quarterly basis.
The Formula
The daily interest is calculated using the simple interest formula:
At the end of the quarter, the sum of all daily interests is credited to your account. From the next quarter, this credited interest also starts earning interest, which brings in the effect of compounding.
Tips to Maximize Savings Account Interest
- Maintain a higher balance: Since interest is calculated daily, keeping a higher balance consistently yields more interest.
- Look for sweep-in facilities: Many banks offer auto-sweep facilities that move excess funds from your savings account to a fixed deposit, earning you higher FD rates while maintaining liquidity.
- Compare bank rates: While major banks offer around 2.70% to 3.50%, some smaller finance banks and private banks offer up to 7% on savings accounts depending on the balance maintained.
Frequently Asked Questions
Is savings account interest taxable?
Yes, interest earned on savings accounts is taxable under "Income from Other Sources". However, under Section 80TTA of the Income Tax Act, individuals and HUFs can claim a deduction of up to ₹10,000 per financial year on this interest. For senior citizens, Section 80TTB allows a deduction of up to ₹50,000.
How often is the interest credited?
While the interest is calculated on your daily closing balance, most banks in India credit the accumulated interest to your account on a quarterly basis (typically in March, June, September, and December).
What is a sweep-in facility?
A sweep-in (or auto-sweep) facility automatically transfers excess funds above a certain threshold from your savings account into a Fixed Deposit (FD). This allows you to earn higher FD interest rates while maintaining the liquidity of a savings account.
Does the interest rate change?
Yes, savings account interest rates are floating and can be revised by the bank based on RBI's repo rate changes and the bank's own policies. Some banks also offer tiered interest rates, where higher balances earn a higher interest rate.