Post Office Savings Scheme: Post Office FDs Pay Higher Interest than Banks; Details Inside

Post Office Savings Scheme: Fixed Deposits have a unique relationship with India's middle class and senior citizens. For the longest time, fixed deposits were the go-to investment option for the Indian middle class. 

Investing in good schemes with fixed and good rates of return remains one of the top priorities for the average middle-class Indian. FDs are favored above other choices due to their risk-free nature, despite being a low-return financial investment tool. They come with options of investing money for both short term and long term depending upon the customers’ needs and requirements. 

Apart from banks, FD schemes are also provided by the Post Office which in some cases offers better interest rates than leading lenders. The rates are revised quarterly depending upon the market situation and government policies. 

Post Office Saving Schemes are higher-yielding investment instruments than fixed deposits. While fixed deposits are backed up by the banks, the interest rate and tax benefits are not as great as Post Office Saving Schemes. 

The post office provides a variety of savings schemes that are beneficial to middle-class Indian households. One of them is the National Savings Time Deposit Account (TD). Apart from government guarantees, the Post Office fixed deposit offers a variety of benefits, including higher interest rates than banks. 

Post Office FD Features 

A post office FD account can be opened with a minimum amount of Rs.1000 and in multiples of Rs.100. There is no maximum limit for investment in these accounts. 

The interest in this case will be paid annually, according to the Post Office's website. According to the India Post website, "no additional interest shall be levied on the amount of interest that has been due for payment but has not been withdrawn by the account holder." This interest, however, will be compounded quarterly. 

Post Office FD Interest Rate 

While post office FD rates are normally raised quarterly, they have remained unchanged since April 1, 2020. Starting with a 5.5 percent interest rate for one-year FD scheme, the rate of return on post office fixed deposits go up to 6.7 per cent. 

• India Post FD rate for 1 year -5.5 percent

• India Post FD rate for 2 years -5.5 percent

• India Post FD rate for 3 years -5.5 percent

• India Post FD rate for 5 years -6.7​ percent

Maturity of Post Office FD 

The deposit amount will be repaid after one year, two years, three years, or five years (as applicable) from the date of opening. The five-year TD investment qualifies for the benefit of section 80C of the Income Tax Act of 1961.