The Department of Posts, Ministry of Communications under the Government of India, offers Fixed Deposit (FD) schemes offering attractive interest rates within the duration range from a minimum of 1 year to a maximum of 5 years. With a minimum deposit of INR 1000 and no maximum limit, the interest is annually payable. The India Post office FD interest rates are between 5.50 – 6.70% per annum, depending on the tenure. The FD schemes offer the highest form of protection for your capital and certainty of income for the depositors. It is supported by the sovereign guarantee provided by the Ministry of Finance. Similar to other small saving schemes, these FD schemes are managed and operated by the National Savings Institute under the Department of Economic Affairs. Resultantly, the post office FD is also referred to as the National Savings Time Deposits.
| Deposit Tenure | Post Office FD rates (p.a.) |
|---|---|
| 1 year | 5.50% |
| 2 years | 5.50% |
| 3 years | 5.50% |
| 5 years | 6.70% |
The Spotlight of Post Office FD Interest Rates
· Interest rate for 5 years: 6.70% per annum
· Interest rate for 3 years: 5.50% per annum
· Interest rate for 2 years: 5.50% per annum
· Interest rate for 1 year: 5.50% per annum
Key Takeaways
- A Post Office Fixed Deposit can be incredibly beneficial for you if you are looking for a way to profit off your idle money.
- In many instances, a Post Office FD interest rate is much higher compared to the ones offered by banks for their fixed deposit accounts.
- Post Office Fixed Deposit enjoys the backing of the Government of India. It is secured under the National Savings Scheme, making it more protected than Bank FDs.
- Anyone can open a Post Office Fixed Deposit by submitting the KYC documents, Deposit Slip, and a fully filled Account Opening Form. There is a provision for this to be done online.
Features of Post Office Fixed Deposit
If you want to get an FD account opened at the post office for 5 years, you will become eligible to claim tax concessions under Section 80C of the Income Tax Act, 1961. The Post Office FD interest rates are contingent on changing as per the notifications issued by the higher authorities. The above-mentioned interest rates are effective from 1 April 2020. Here are some features of Post Office Fixed Deposit –
- The minimum amount is Rs.1,000.
- You can own anyway number of accounts in any post office anywhere across the country.
- Your account can get transferred on request from one post office to another depending upon your postal address anywhere in the country.
- You can make use of the nomination facility available at the time of opening your FD account and afterward.
- If you own a single account, it can be converted into a joint account and vice versa.
- Your account can be opened by depositing cash or a cheque.
- You must convert a minor’s account after s/he attains maturity.
- There is no cap on the upper limit of the amount deposited.
- The tenure of the deposit can be extended by ushering in an application.
- You will receive the interest annually, and it will be directly credited to your savings account.
Did You Know?
According to research by BankBazaar.com, it has been reported that there are approx. 93,55,825 Post Office FDs all over the country. This widespread popularity of POFDs can be explained by its beneficial features. That includes guaranteed returns and low risk.
Benefits of Post Office FD Scheme
Post office Fixed Deposits benefit one and all. Some of them are mentioned below –
- To get a Post Office Fixed Deposit account opened, you need a minimum of INR 200 with no cap on the maximum amount.
- You can earn a handsome interest rate on the amount deposited and earn upto 7.7% on the amount deposited under the Post Office Fixed Deposit scheme.
- You can nominate a family member, relative(s), or a friend as a nominee.
- Once your fixed deposit scheme matures, you will get the option to renew the scheme or withdraw the amount. You will also have the option to withdraw the amount before maturity, but in that case, you will have to pay certain charges.
- You get to enjoy tax benefits if you choose the old taxation regime. Under Section 80C, Income Tax Act, 1961, the tax deductions are applicable.
- Senior citizens enjoy a tax exemption of up to INR 50,000 under Section 80TTB.
Why Should You Choose Post Office Fixed Deposit?
The Post Office FD delivers interest rates that are, at times, higher than a fixed deposit of a bank. Usually, a Post Office fixed deposit interest rates range anywhere between a company FD and a bank FD. You get to choose from 1-5 years, and the interest rates gradually increase with the tenure. And most importantly, a Post Office fixed deposit comes with the sovereign guarantee of the Government of India as Indian Postal Services offer the investment tool.
Who Can Invest in Post Office FD?
Any individual can invest in a Post Office fixed deposit. It can be done either by depositing cash or a cheque. You can also initiate a Post Office FD online by applying through the India Post Mobile Banking app. The cheque realization date for the government records will be considered the account opening date. However, it is not the same for NRIs. They cannot start a Post Office FD online.
In case you are a conservative investor and seek a risk-free and guaranteed income source, a Post Office FD is a suitable option for you. Those nearing retirement or retirees usually opt for a Post Office FD to protect their hard-earned capital.
Word to Remember
Interest Rate
It is the amount charged on a principal amount deposited or borrowed for a given period of time.
Fixed Deposit
This is a type of bank account through which the account holder is provided with a guaranteed interest rate for investing his funds in it for a chosen time period.
Conclusion
If you are looking to profit off your idle money, then a fixed deposit is the way to go. And if you are wondering which fixed deposit is the best, then you should opt for Post Office FD. The Post Office FD interest rate is much higher than what most banks give for their fixed deposit accounts. In addition to this, a Post Office FD has the backing of the government of India itself. So, it is way more secure than an average Bank FD.
Do not think twice. Invest your money in a Post Office FD.
FAQs
Post Office FD and Bank FD have a lot of similarities. But before you write them off as the same, be aware that there are notable differences.
The interest rates of Bank FDs are controlled by a particular issuing bank. Compared to this, Post Office FDs have interest rates that are decided when each quarter begins.
The duration for Bank FDs can be as small as four days or as long as ten years. Compared to this, a person can avail POFDs for 1, 2, 3, or 5 years.
If a person chooses to open a POFD, he/she must do it at a post office or a bank physically. There is no provision for any online service. However, the person can create online Bank FDs.
POFDs enjoy more security than Bank FDs since the former has the support of the government.
Consider the following list of documents you need to submit to open a Post Office FD account:
KYC documents.
Deposit Slip (SB 103).
You must fill out the Account Opening Form (AOF) and submit it.
Yes. This is possible through mobile net banking. Either that or you can use an intra-operable net banking facility.
Yes. Whatever investments you make in your Post Office FDs, it is secured under the National savings scheme. That is backed by the Government of India itself. So, rest easy, knowing that this is a safe place to make your investment.
There must be a waiting period of 6 months between the time you opened your account and the moment when you break your deposit. Once that period is complete, you are allowed to make a premature withdrawal.
