Use smart cash management to optimise returns on short-term funds

HDFC Bank has reduced its savings account interest rate from 3 per cent to 2.75 per cent. Several other large banks also offer interest rates below 3 per cent. Given such low returns, savers need to manage their short-term money more efficiently.

Maintain limited balance

A savings account offers convenience. “Premature withdrawal from fixed deposits or redemptions from mutual funds can be avoided,” says Avinash Luthria, Securities and Exchange Board of India-registered investment adviser and founder, Fiduciaries.

 

However, one should avoid keeping excessive funds in savings accounts. “They should be used mostly to keep running expenses and not as a savings instrument,”