People invest in bank FDs for safe investment and guaranteed returns. Recently, after the repo rate cut by RBI, banks have started reducing the interest rates of fixed deposits. On the other hand, for a long time, the government has not cut the interest rates of small savings schemes like Post Office Time Deposit (POTD). Do you know which option among Post Office Time Deposit and Bank FD gives a better option to invest in?
The Post Office Time Deposit Scheme is like Bank FD. Investment can be made in it for 1 year, 2 years, 3 years, and 5 years. Post Office Time Deposit Scheme gives interest ranging from 6.9 percent to 7.5 percent. Currently, a 7.10 percent return is available on a 3-year time deposit of the Post Office. This interest rate is for the April-June quarter.
Highest interest rate on 3-year bank FDs
Many private banks are still offering higher interest rates on FDs than post offices. DCB Bank, RBL Bank, and Yes Bank are leading the pack with 7.50 percent per annum on 3-year FDs. Bandhan Bank and IndusInd Bank are followed by 7.25 percent per annum and Canara Bank is offering 7.20 percent per annum. Bank of Baroda is also slightly ahead with 7.15 percent per annum. On the other hand, Axis Bank, HDFC Bank, ICICI Bank, and Kotak Mahindra Bank are offering 6.90 percent per annum interest on 3-year FDs for general citizens. This is 0.20 percent less than the interest rate offered by post office FDs. Many public sector banks like SBI, Union Bank, PNB, and Indian Bank are offering interest rates ranging from 6.25 percent to 6.75 percent on 3-year FDs to the general public.
Returns on a 3-year time deposit in the post office
Interest rate: 7.10 percent per annum
Estimated return: ₹1,17,538
Total value on maturity: ₹6,17,538
Returns on 3-year FD in most big banks
Amount invested: ₹5,00,000
Interest rate: Around 6.90 per cent per annum
Estimated return: ₹1,14,598
Total value on maturity: ₹6,14,598
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