Savings account interest rate vs PPF interest rate: 3 banks that are offering inflation-beating rates

Investing in a sound and non-volatile financial tool is one of the best ways of safe and riskless investments. There are many financial tools available in the market which doesn’t get affected by the market's ups and downs. One such tool is Savings Account. Opening a savings account is the first basic step of wealth management, and is mostly followed by all. Just like fixed deposit schemes, savings accounts are considered secure investment platforms. Both give investors the opportunity of earning fixed decent returns. 

In general, savings account interest is calculated on a daily basis on the account's end-of-day total amount and paid out quarterly. Besides, a savings account also allows the account holder to earn interest on the money he or she has deposited and allows them to make free withdrawals whenever they need. Though most banks offer an interest rate of 2.70 per cent per year to 7.00 per cent per year, a few banks give even higher rates up to 7.50 per cent. 

These rates are even higher when compared with the interest rates on Public Provident Fund (PPF). At present, the PPF interest rate is 7.1 per cent, which is revised by the government every quarter. 

Here are the 3 banks that are offering interest rates ranging between 7.50 per cent and 7 per cent. 

Ujjivan Small Finance Bank 

The small finance bank is offering an interest rate of 7.50 per cent on savings bank account for deposits of more than Rs 25 crore. The interest rates, which were last revised on November 1, are applicable for domestic as well as non-resident accounts. 

Amount	Interest rate
> ₹5 lakh to ₹25 crore	7.00%
>= ₹25 crore	7.50%

 AU Small Finance Bank 

The bank is offering an interest rate of 7.25 per cent on savings account balances ranging from Rs 25 lakhs to less than Rs 1 Crore. The rates were last revised on October 10, 2022. As per bank’s website, the interest on the savings account is calculated on a daily basis and paid to the customers at the end of each month). Interest rates mentioned are applicable for the incremental balances that are present corresponding to the amount slab mentioned, stated AU Small Finance Bank on its website. 

The interest on the Savings Account is calculated: 

Interest = Daily balance * (Number of Days) * Interest / (Days in a Year).  

For a daily balance amount of Rs 1 lakh and interest of 5 per cent on the Savings Account, the interest earned daily will be: 

Rs 1 lakh * 30 days * (5/100) / 365 = Rs 410.95 

Utkarsh Small Finance Bank 

The interest rates on savings bank deposits of Utkarsh Small Finance Bank ranges from 4.25 per cent to 7.50 per cent depending on the account balance. The interest is calculated on a daily product basis and credited quarterly. On savings account incremental balance above Rs 25 lakh to Rs 10 crore, the bank is offering an interest rate of 7.25 per cent per annum. For a balance more than Rs 10 crore, the interest rate offered is 7.50 per cent. 

Amount	Interest rates
Incremental Balance above Rs 25 Lakhs up to Rs 10 crore	7.25% p.a.
Incremental Balance above Rs 10 Crore	7.50% p.a.

PPF interest rates 

PPF is termed as the EEE investment scheme because there is tax exemption on investment, interest / return and maturity. It's a risk-free scheme with decent returns as the interest is calculated on compounding power. The scheme is backed by the Centre, and can be opened in a bank or in a post office. Many banks, like State Bank of India, ICICI Bank, also offer the same scheme, which has an initial lock-in period of 15 years.  

How to calculate

Yearly investment: Rs 100,000

Time period: 15 years

Rate of Interest (current): 7.1%

Total interest: Rs 12,12,139

Maturity value: Rs 27,12,139