Why are savings rates stuck at 3.5%? Despite being deregulated in Oct 2011, banks have stuck to 3.5-4% over the past decade. Some exceptions existed such as Kotak Mahindra's 811 account which offered 6% in 2017 and 5% from 2018-2020. But these have also disappeared over time. 
In today's era of rising rates, this is a free lunch for banks. The lunch was a tiny snack in 2020-21 when rates were cut. Moving money to an FD wasn't that rewarding. You got maybe 1-2% more. Today, that free lunch is a buffet. Savings rates are half of FD rates of even 1 year.
The same gap exists with returns of money market funds. In both cases you give up some liquidity. In case of FDs, a sudden need for money will mean breaking it and losing interest (note sweep-in sweep-out FDs can sort this out).
In money market funds (and liquid funds) you get your money within 1 day of giving redemption (T+1). You also come under capital gains tax for your returns. This is slab rate for redemptions within 3 years, but you get some advantage like set-off and carry forward.
Don't let your bank enjoy a free lunch. It isn't not good for its health or yours. Story by @maulik_madhu livemint.com/money/personal… #personalfinance #investing #interestrates
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