Savings Account Interest Rate: IDFC First Bank has updated its savings account interest rates. These new rates took effect on January 9, 2026. The bank continues to offer its progressive interest rate structure. With this structure, savings up to Rs 1 lakh will earn an annual interest of 3%.
For amounts exceeding Rs 1 lakh and up to Rs 10 lakh, a 5% interest rate will apply. The top interest rate of 6.5% is available for amounts between Rs 10 lakh and Rs 10 crore. For balances above this, the interest rate will gradually decrease, and amounts over Rs 10 crore will receive a lower interest rate.
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What exactly is a progressive interest structure?
A progressive interest structure means that the higher interest rate only applies to the portion of the balance that falls within that specific slab, not the entire amount. For instance, if you have Rs 10 lakh in your savings account, the bank will give you 3% interest on the first Rs 1 lakh and 5% on the remaining Rs 9 lakh.
Similarly, if your account balance is Rs 1 crore, you will earn 3% on the first Rs 1 lakh, 5% on the next Rs 9 lakh, and 6.5% on the remaining Rs 90 lakh. This system is advantageous for customers with higher balances, as the extra amount earns better returns, while those with lower balances are unaffected.
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As for how interest is calculated and paid, the bank mentioned that, following RBI guidelines, savings account interest is calculated based on the daily end-of-day balance and credited monthly. IDFC First Bank calculates interest using 365 days in non-leap years and 366 days in leap years. The final interest amount is rounded to the nearest rupee.
According to the bank, the revised interest rates may particularly benefit account holders with large balances. However, it also states that savings accounts are primarily beneficial for liquidity. For surplus funds that are not immediately needed, liquid mutual funds can offer better returns and easier access to funds. These funds invest in short-term debt instruments and focus on capital preservation, making them a more effective option than excess cash sitting in a savings account.