Savings Account Interest Calculator
Most savings accounts pay between 2.5% and 4% a year on the balance you maintain, and a current account pays nothing at all. That keeps the account useful and little else — so the number is worth knowing, not guessing. This calculator turns an average balance, published rate and period into the interest you should receive, so idle money can be compared against an FD or a liquid fund before inflation erodes it.
Enter values
Results
- Interest earned
- ₹1,500.00
- Interest for a full year
- ₹1,500.00
- Balance with interest
- ₹51,500.00
How is the Savings Account Interest calculated?
Enter the average balance you expect to maintain, the annual rate your bank pays and the period in months. The calculator applies interest across that period and returns the interest earned, the same balance's full-year figure for quick comparison with rate tables, and the closing balance with interest added. Banks actually compute on your daily balance and credit quarterly — on a balance that never moves, both methods land on the same rupees.
Formula
I = P × r × t where: P = average daily balance r = annual interest rate as a decimal (3% → 0.03) t = period in years (months ÷ 12) Banks use the daily-balance method: interest = (sum of daily balances × r) ÷ 365, credited quarterly. On a constant balance it simplifies to the formula above.
Example
Average balance: ₹50,000 · Rate: 3% per year · Period: 12 months Interest = 50,000 × 0.03 × 1 = ₹1,500 Closing balance ≈ ₹51,500 Hold the same balance for six months and you earn ₹750. The same ₹50,000 inside a 7% fixed deposit compounded quarterly grows by about ₹3,593 over a year — the entire price of keeping it fully accessible.
Things to remember
Savings interest is real money but rarely growing money — at 3%, inflation outruns it. The balance's job is access, not return: keep the buffer, know its yield, and move anything beyond it to an instrument matching when you need it. Interest is taxable at your slab rate, though most banks do not deduct TDS on it.
Frequently Asked Questions
How often do banks credit savings account interest?
Most Indian banks compound daily balances and credit the interest quarterly, though some pay monthly. Either way the calculation sits on your end-of-day balances for the period, so a balance that dips for even a few days earns less than one that stays flat the whole quarter.
What is an average daily balance?
It is the sum of your account's end-of-day balances divided by the days in the period. Banks also use it as a qualifying rule — a savings account promising a higher rate may require a daily average of ₹10,000 or more, failing which the standard rate applies instead.
How much interest will ₹1 lakh earn in a savings account?
At 3% a year, ₹1,00,000 earns ₹3,000 over twelve months; at 2.5%, ₹2,500. A seven-year view of that same money in a fixed deposit at 7% changes the picture entirely — which is why the savings balance should be sized to the emergency fund, not used as the investment.
Do I pay tax on savings account interest?
Yes, it is added to your income and taxed at your slab rate, though banks usually do not deduct TDS on it. You can deduct up to ₹10,000 of savings interest a year under Section 80TTA (₹50,000 under 80TTB for senior citizens) when you file.
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