The interest rate is the wrong headline
Savings rates are deregulated and some banks pay noticeably more, which makes them easy to compare and easy to lead with.
The reason it matters less than it appears: interest is computed on the daily balance, and for most households that balance is a modest working amount rather than a corpus. A percentage point of difference on a month's expenses is a small annual sum — smaller than a single minimum-balance penalty.
And where a large balance is sitting in a savings account, the right response is usually not a higher-paying savings account. It is to stop holding a large idle balance — sweep it, or move it somewhere matched to when it is needed.
Choose a bank on whether it works. Optimise the rate on money that should not be sitting there anyway.
What actually matters
| Criterion | Why it decides the experience |
|---|---|
| Branch and ATM access where you live | The one thing that cannot be fixed remotely when something goes wrong |
| App and net banking quality | You will use it several times a week for years |
| The schedule of charges | Minimum balance penalties, transaction limits, card fees — these routinely exceed the interest earned |
| Minimum balance requirement | A high one locks up money and creates a penalty risk |
| Service when something breaks | A disputed transaction or a blocked card is when the relationship is actually tested |
| Sweep facility | Deposit rates with savings-account behaviour, which is worth more than a better savings rate |
The charges row deserves emphasis. A poorly-matched account can produce a negative effective return — minimum balance shortfall charges alone can exceed a year of interest on the same balance, and they are levied monthly. The schedule of charges is published; reading it once is worth more than comparing rates.
Hold accounts at two banks
The recommendation that solves a problem one bank cannot, and it is rarely made.
Any single bank can be unavailable at the wrong moment — a technical outage, a card blocked on a fraud rule, a KYC issue freezing operations, a classification problem, or in rare cases a restriction placed on the bank itself. None of these is common; all of them have happened; and each removes access to your money for a period.
A second account at a different bank makes every one of those an inconvenience rather than an emergency. It costs nothing beyond keeping both active, and it is the cheapest operational resilience available in personal finance.
There is a second reason. Deposit insurance applies per depositor per bank, so balances above the limit at a single bank are not covered. For households holding substantial deposits, spreading across banks is a genuine protection rather than a precaution.
A sensible structure: a primary bank for salary and daily use, and a second holding the emergency fund and deposits — which also adds useful friction between your spending account and your buffer.
Match the account type to what you need
- Regular savings — the default, with a minimum balance requirement.
- Basic savings accounts exist with no minimum balance requirement and a restricted feature set, which suit anyone for whom the penalty risk outweighs the features. Terms are set by regulation — check the current position.
- Salary accounts usually waive the minimum balance while the salary credit continues, and revert to a regular account when it stops. That reversion catches people after a job change — a dormant salary account can start accruing penalties.
- Senior citizen variants typically offer better deposit rates and relaxed requirements.
- A current account only if transaction volume genuinely requires it.
The salary account point is worth acting on. When you leave a job, decide deliberately whether to keep the account, convert it, or close it — rather than letting it sit and discovering charges later.
Setting one up properly
- Add a nominee at opening. Free, takes minutes, and it is the highest value-per-effort action in banking.
- Choose the operating mode deliberately if it is joint — either-or-survivor, not "jointly".
- Turn on transaction alerts at the lowest threshold available. Speed of detection is what determines recovery from fraud.
- Set sensible transaction limits rather than leaving the maximum.
- Read the schedule of charges once.
- Record it on the documents index.
When to switch, and when not to
Worth switching for persistently poor service, a minimum balance requirement you keep breaching, no branch or ATM access where you now live, or an app you genuinely cannot use.
Not worth switching for a marginally better savings rate. The move means redirecting salary credits, standing instructions, autopay mandates, KYC updates across linked services, and updating the account on every investment folio — hours of work for a small annual sum.
And there is a hidden cost worth naming: a long relationship with one bank has some value when you later want a loan or a locker, and it is lost on switching.
Adding a second bank is usually the better move than replacing the first — you gain the resilience without unwinding anything.
What the account is not for
A bank account is for a working balance and short-term money. It is a poor home for anything with a horizon, because the rate rarely keeps pace with inflation — making a large idle balance a slow, certain loss of purchasing power.
Money with a date attached belongs somewhere matched to that date. FNOTrader's Mutual Funds app carries the full AMFI NAV history — around 34 million NAV rows — so a low-duration option's actual behaviour and worst drawdown are inspectable before anything is moved.
FNOTrader is not a bank and does not hold customer funds.
Common questions
Should I choose a bank based on its savings interest rate?
Rarely. Interest is computed on the daily balance, which for most households is a modest working amount, so a percentage point of difference is a small annual sum — often smaller than a single minimum-balance penalty.
What should I actually compare between banks?
Branch and ATM access where you live, app and net banking quality, the schedule of charges, the minimum balance requirement, service when something breaks, and whether a sweep facility is offered.
Why should I have accounts at two banks?
Because any single bank can be unavailable at the wrong moment — an outage, a blocked card, a KYC freeze, or a restriction on the bank itself. A second account makes each of those an inconvenience rather than an emergency, and it costs nothing beyond keeping both active.
Does deposit insurance cover all my money at one bank?
It applies per depositor per bank up to a limit, so balances above that at a single bank are not covered. For households with substantial deposits, spreading across banks is a genuine protection rather than a precaution.
What happens to my salary account when I change jobs?
The minimum balance waiver usually depends on the salary credit continuing, so the account reverts to a regular one when it stops — and can start accruing penalties. Decide deliberately whether to keep, convert or close it.
Is there an account with no minimum balance?
Basic savings accounts exist with no minimum balance requirement and a restricted feature set, which suit anyone for whom the penalty risk outweighs the features. The terms are set by regulation, so check the current position.
Is it worth switching banks for a better rate?
Usually not. Switching means redirecting salary credits, standing instructions, mandates and KYC across linked services, and it forfeits a long relationship that has value for a later loan or locker. Adding a second bank is generally the better move.
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