How do you get interest on a savings account?
In simple terms, interest is an amount charged for borrowing money. When you deposit money in a bank savings account, the bank uses the money to give loans. As you know, the bank charges interest on these loans. Your money in the bank is equivalent to you lending money to the bank for which the bank pays you interest.
There will be a difference in the interest rate on loans given by the bank and the interest you earn on the money in your savings account. The interest on the loans will be slightly higher. This difference is the bank’s profit.
The interest on your savings account is compounded daily. You will earn interest on the interest you earn. These small amounts add up to give you a handsome return.
The interest rate offered depends on your balance, as well. There is an optimum range that offers maximum returns. It would be advisable to maintain your balance within this range as you can earn the most interest.
Why choose a savings account?
The typical interest rate offered by banks in the UAE on savings accounts ranges between 0.5 to 3%. At first glance, this seems to be a very low amount. However, you need to consider the other benefits of having a savings account.
Unlike other forms of investment, a savings account offers instant liquidity. The money can be withdrawn whenever you need it. A savings bank also makes it easier to transfer money and is a zero-risk investment. You will never lose any amount from the savings account.
Get the best interest rates for your savings account!
With so many banks promising different benefits, how do you decide on the one that is a perfect match for you? Start by identifying a range in which your account balance will fall most of the time.
Now, compare the interest rates and other benefits offered by different banks for this balance amount. Decide on the bank and approach them to start a savings account and watch your money grow!