Answering The Most Common Questions About NRE Interest Rates

Whether you become or already are a non-resident Indian, you need to open an NRI Account on priority. Operating through an NRI Account fulfils your legal obligation and is advantageous. The types of NRI Account you should open depends on your banking requirement. Non-Resident External or NRE Account is apt if you wish to park your foreign earnings and make seamless remittances.

When opening an NRE Account, pay attention to its interest rate. A higher interest rate works in your favour. Let us understand more about the account and the NRE Account interest rates through FAQs.

What are the NRE Account interest rates offered?

This depends on how you choose to hold the account. There are three ways you can hold an NRE Account: Savings, Current, and Fixed Deposit. A Savings Account is ideal to meet your daily banking needs. A Current Account is typically used for business transactions. FDs are perfect if you wish to secure and grow your savings. These options have a different interest rate offerings.

Savings Account offers a reasonable interest rate that allows you to keep your money working. However, the interest rate is lesser than that of an FD. Invest in an NRE Deposit to earn competitive interest returns.

How to get the best interest rates?

NRE Account interest rates vary for each bank. The only way to get the best rate for your account is by exploring the market. Do not open an account without doing thorough market research. Run a search online before opening an NRI Account. Check the interest rates. Open an account with banks that offer the highest interest rate and a host of other benefits. You can easily find information on the bank portal.

How are NRE Savings Account interest deposits calculated?

Like every other Savings Account interest calculation, this one depends on the balance you maintain. The closing day balance in your account is considered to calculate the interest earned. A higher balance attracts a higher interest rate and vice-versa.  Generally, most banks follow a quarterly interest payout.

However, they may choose to change the interest payout policy anytime. Watch for updates on the bank’s website to know about NRE Savings Account interest rates changes.

What are the tax implications on the interest earned?

Interest earned on your NRE Account deposit is tax-free. You can also entirely repatriate the interest earned to your country of residence at any point. The tax implications apply to interest earned from an NRE FD as well. However, if you transfer the interest earned from your NRE Account to your NRO Account, you must pay taxes.