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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.
Total Principal
₹3,50,000
Total Interest
+₹43,496
Total Balance
₹3,93,496
| 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 |
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 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.
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.
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).
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.
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.