Those people, who are not ready to face any type of risk regarding their hard-earned money, generally prefer savings. Through savings, they try to secure their financial condition in the future. Now, growth of the money is also an essential factor for the depositors. If the money is not growing at a good rate then it may cause problem to the depositors at times when the country is passing through a phase of high inflation.
Another important factor is the savings rate of a country. It has been shown in several financial surveys that if the savings rate of a society is less than 10%, the society has faced economical hardships. It should also be considered with due importance that if interest rates on savings are not satisfactory then there are several other options where an investor can put his money. If this happens, then the savings rate is sure to come down and this can cause economic problem for the entire economy.
Interest rate that is offered on the savings should be competitive enough so as to maintain its existence in the financial markets where stocks and mutual funds are gaining substantial importance over the passage of time. These investment mediums are providing enough scope for rapid growth of the money and this can change the financial and social status of the investor. At the same time, this can also provide financial security to the investor for the future. So the interest rate offered on the deposits should consider all these factors with due importance.
