Everyone of us has a Savings Account in one of the banks including SBI, ICICI, Axis, etc. But how many of us know how interest is calculated in our Bank Savings Account? Savings Account Interest Calculation can be done very easily if we know Bank Balance, interest rate and number of days for which we want to calculate interest, and this is what we are going to see in this article using excel examples.

**Savings Account Interest Calculation involves calculation of one day interest rate to yield one day interest, which is then multiplied by the number of days to reach the interest amount in our Bank’s Savings Account. Two important points to note – Interest in Savings Account is calculated on daily basis using simple interest and interest is calculated on Lowest balance of the day.**

*Note: You’ll find Savings Account Interest Calculator excel at the bottom of this article*

- Savings Account Interest Calculation Video
- Savings Account Interest Rate
- What is Savings Account Interest Calculator
- How to use Savings Account Interest Calculator
- Compounding in Savings Account
- How Calculator works
- Income Tax on Savings Account
- Tips to increase Savings Account Interest
- Section 80TTA vs Section 80TTB
- Savings Account Interest Calculation using Excel
- Download Savings Account Interest Calculator Excel
- More Videos

## Savings Account Interest Calculation Video

Watch full video above to understand how savings account interest can be calculated using excel calculator offline.

## Savings Account Interest Rate

Interest rate on Savings Account depends on the bank you have your Savings account in. Some banks provide specials interest rates if you maintain certain amount of balance in your savings account.

**Usually the current interest rate in Banks is 3% annually.**

**Love Reading Books? Here are some of the Best Books you can Read**: (**WITH LINKS)**

## What is Savings Account Interest Calculator

Savings Account Interest calculator is a free online calculator that helps you to calculate interest in your Bank’s Savings Account. This will help you to make an estimate about how much interest you can expect from savings account based on your balance, interest rate and number of days you are able to maintain balance in your account.

**It is important to note that Interest in your savings account is calculated daily on the lowest balance using simple interest.**

So in case you make a debit (withdraw money) on a particular day, the lowest balance in your bank account will be realized and interest will be calculated on lowest balance on that day.

In case of credit (Deposits), the lowest balance will be before the credit was made and hence the new balance after deposits will be considered from next day for interest calculation.

**ALSO READ: PPF Interest Calculation using Excel**

## How to use Savings Account Interest Calculator

You can easily calculate interest in your savings account using above calculator for FREE. Below are the steps you should perform:

- Provide your current Bank Balance in Balance field
- Update the Interest rate in your Bank’s savings account – annual interest rate
- Provide the number of days for which you want to know the estimated interest for mentioned balance, interest rate and number of days
- Once you provide above details, your calculated interest in savings account will be displayed in Interest Amount field

## Compounding in Savings Account

- Compounding in Savings account happens
**quarterly** - Most of the banks credits interest amount as “Credit Interest Capitalized” on quarterly basis at the end of March, June, September and December months every year

**Watch how compounding works in SIP**

## How Calculator works

Most important question is how Savings Account interest calculation works? Is there anything you need to know apart from the information I have given till now.

So if you are curious to understand how interest is calculated in your savings account, you need to do some math so that we can learn it in a better fun way!

2 points to consider:

- Interest is calculated daily in your savings account
- Lowest balance is considered for that day’s interest calculation

Let’s take an example: Let’s say your Bank Balance is Rs. 1 Lac, interest rate is 3% and number of days = 10 for which you want to know how much interest you’ll get with these numbers. Below are the steps to perform:

- Divide your annual interest rate by 365 to get 1 day interest rate
- So 3% / 365 days =
**0.00822**(day’s interest rate) - Now since we have day’s interest rate, we can easily calculate one day interest using below formula
- Interest = Balance * Day’s Interest Rate / 100 = Rs. 1,00,000 * 0.00822 / 100 =
**Rs. 8.21** - This amount can then be multiplied by number of days to get total interest amount for those days – Rs. 8.21 * 10 =
**Rs. 82.1**

And this is what we see in our calculator as well: *Amount rounded off*

## Income Tax on Savings Account

If your age is below 60, up to FY 2021-22, you get tax free interest amount in your savings account up to Rs. 10,000 in a financial year under **section 80TTA**. Which means you don’t have to pay any tax on interest up to Rs. 10,000 in a financial year.

For senior citizens above 60 years of age, the limit is Rs. 50,000 under **section 80TTB** for which they don’t pay any tax on this interest amount in a financial year.

While filing ITR, you should mention savings account interest and claim it under appropriate section based on your age.

**Here is the income tax calculation video using excel**

## Tips to increase Savings Account Interest

So now you have understood how to calculate interest in your savings account, you would be wondering is there any tips or tricks to maximize interest amount in your savings account?

There is one! Thank me later when you implement it in your real life.

**The tip to maximize interest amount in savings account is to keep the balance for more number of days and withdraw only when it is required. Let’s say you want to withdraw Rs. 1 Lac and need it after 2 weeks, then you should delay the withdrawal process to at least a week or more so that you get interest amount on the money you are supposed to withdraw for those extra days. **

It looks like it will be small interest money for small amount of withdrawals, but in case you plan to withdraw amounts in lacs, you can delay it for sure until it is required to gain additional interest money for few more days 🙂

**ALSO READ: Fixed Deposit Interest Calculator [EXCEL]**

## Section 80TTA vs Section 80TTB

### Section 80TTA

This section helps to claim interest amount up to Rs. 10,000 in a financial year for people up to age of 60 years (non senior citizens). So the interest amount gained in a financial year from all savings account can be claimed under this section. Tax will be calculated only on interest amount above Rs. 10,000 in FY.

### Section 80TTB

This section helps to claim interest amount up to Rs. 50,000 in a financial year for people of age above 60 years (senior citizens). So the interest amount gained in a financial year from all savings account can be claimed under this section. Tax will be calculated only on interest amount above Rs. 50,000 in FY.

## Savings Account Interest Calculation using Excel

We can easily calculate interest amounts in our savings account based on the current balance, withdrawal and deposit transactions and interest rates.

For example let’s say we have Rs. 1 Lac as balance for 10 days in savings account. On 11th day, we withdraw Rs. 10,000 so our balance becomes Rs. 90,000 for next 10 days, On 20th day, we deposit Rs. 50,000 so balance becomes Rs. 1,40,000 for next 10 days.

Following is the list of transactions that will look using excel calculator:

As seen above, when we deposit Rs. 50,000 on 20th day to make our balance Rs. 1,40,000 for next 10 days, Rs. 90,000 is the lowest balance on 20th day and this is considered for interest calculation.

So always remember, when you make deposits, those deposits will start earning interest from next day, provided there are no withdrawals on next day, and only lowest balance will be considered for interest calculation everyday.

## Download Savings Account Interest Calculator Excel

Click on above link to download Savings Account Interest calculator in excel.

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