After making usage of any bank ATM free, RBI now moves towards changing the interest calculation of savings accounts. It is really a good change and our savings accounts will earn a better interest income.
How savings account interest is calculated?
At the present time, banks are calculating the interest rate on the lowest amount available in your savings account from 10th to the end of month. The disadvantage is that if you have a low balance on any of these days, you will get interest on that amount only. For example:
If your account shows the following balance for the month of February 2010:
You will get interest only on 1,000/- rupees, which is the lowest balance available in your account at 3.5% per annum, which turns out to be, Rs. 2.92.
According to the new circular from RBI, banks have to calculate the interest on a daily product basis and this must be implemented from April 1, 2010. This way savings account holders will not lose interest for even a rupee.