- When it comes to investments, many Indians prefer fixed deposits or FDs since they provide assured returns. These, unlike stocks and mutual funds, provide secure returns because they are not affected by market volatility. Falling FD rates, on the other hand, have become a source of concern for investors.
- Several banks have recently decreased their FD rates. In recent months, the reduction has been so significant that they now appear to be on par with the interest rates offered by many banks on savings accounts. Given the circumstances, traditional investors who prefer to put larger sums in FDs may have second thoughts.
- Experts advise such investors to invest in a post office fixed deposit rather than a bank FD. They argue that the post office FDs interest rate is presently larger than many bank FDs. For a term of 1 to 5 years, the post office offers a 5.5 percent interest rate for one year, two years, and three years. Investors earn 6.7 percent during a five-year period. You can calculate your FD returns for Post Office with the aid of a Post Office FD Calculator.
Further Key Takeaways
- Major banks, on the other hand, are already offering FDs with rates ranging from 5.1 percent to 5.4 percent for similar terms. SBI offers a 5.10 percent interest rate on one-year fixed deposits of up to Rs 2 crore.
- Interest rates for post office savings accounts follow the government’s small savings account interest rates, which are updated weekly. The fixed deposit account’s interest rate is paid annually but computed quarterly.
- Another significant advantage of the post office fixed deposit system is its security. Regardless of the deposit amount, the safety of a post office FD is the highest because it is guaranteed by a government guarantee. According to India Post, investments made through the 5-year fixed deposit account are eligible for income tax benefits under Section 80C of the Income Tax Act, 1961. A post office FD account must be opened with a minimum of Rs 200 and multiples of that amount. There is, however, no upper limit.