You keep some money in your saving bank account for daily expenses and a bit extra for an unexpected, unbudgeted expense. There are other products that also give you liquidity such as liquid funds, which are low risk as well. These give better returns but carry some risk and are not so accessible. Savings bank deposits are familiar, accessible and zero risk. Mint explains how to choose between them.
RETURNS
Most banks give an interest of 4% per annum on savings accounts. Some private sector banks offer in the range of 6-7% per annum, but they have higher minimum balance requirement. Liquid funds are market-linked mutual funds. These funds gave, post expenses, an average annual return of around 7.5-8.5% last year.
Savings account: bad
Liquid fund: good