Fixed Deposit v/s Post Office FD Rates: Top 5 Comparison Points
Fixed deposits and post office deposit plans are popular investment options in India. These instruments are preferred by individuals who want to grow their investments faster without taking any risks.
Let us compare these instruments to see which one among them proves to be better in today’s context:
Minimum deposit amount
Fixed deposit plans are offered by both banks and finance companies in India. Therefore, the deposit amount varies according to the financier that you choose for depositing your investments. However, the minimum deposit amount of FD is usually Rs. 10,000 or above that. It means that the minimum deposit amount is far higher than the post office deposit plans.
The post office deposit plans are regulated by the Post Office of India. The deposit amount of these plans depends on the type of deposit plan you are interested to invest in. For instance, Post Office Time Deposit allows you to start with a small investment of Rs. 100 and there is no upper limit to it.
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The tenor range of a fixed deposit also depends on the financier chosen by you. Usually, FD plans ranging from 7 days to 10 years are available. The post office deposit plans offer tenor from 7 days to 5 years.
Therefore, it can be said that both these deposit types offer the flexibility of tenor to the investors.
Banks allow premature withdrawal these days but a penalty up to 2% will be deducted from your accumulated interest earnings.
The premature withdrawal conditions are a bit stringent when it comes to post office deposit plans. For instance, the POTD will allow you to withdraw your deposits only after completing 6 months from the date of investment.
Also, a penalty of 1% is charged for deposit schemes with the tenor of 24 months and above.
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FD Interest rates
The interest rates of both bank deposits and post office deposit schemes remain constant irrespective of the changing market conditions.
Some banks tend to offer a slightly higher FD interest rate to senior citizens. On the other hand, post office deposit schemes do not offer a higher rate to senior citizens.
The bank FD rates are well below 5% these days due to the uncertain economic situation. Though the post office fixed deposit interest rate is higher, they too have been affected due to the economic crisis. The 5-year time deposit offers an interest rate of 6.7% whereas the 3-year time deposit provides an interest rate of 5.5% currently. However, if you choose a high yielding corporate fixed deposit such as Bajaj Finance FD, you can earn high interest rates up to 7.35%.
For investing in a post office deposit scheme, you will have to open a post office account. For that, you will have to visit a post office whereas banks offer an online investment procedure to their customers.
The best choice is Bajaj Finance FD that provides a complete online procedure. You will also get a 0.10% additional FD rate for choosing the online process. Not only that, you can get up to a 7.35% FD rate on investing in this FD scheme that is higher than both bank and post office FDs.
You need not break your FD prematurely as a loan against FD is provided up to 75% of your FD value. A flexible tenor ranging from 12 to 60 months is provided and the senior citizens get a 0.25% additional FD rate as well.
Moreover, Bajaj Finance FD has received MAAA/stable rating from ICRA and FAAA/stable rating from CRISIL. It means that your invested amount is safe when you deposit in this FD scheme. Therefore, this FD scheme proves to be a better choice in today’s circumstances.
Fixed deposits plans are provided by post offices, banks, and finance companies in India. The interest rate determines the returns of fixed deposit plans as it remains constant throughout the tenor. The bank FD rates are not up to the mark and only the 5-year POTD offers an interest rate of 6.7% currently. In these testing times, the Bajaj Finance FD scheme proves to be best because it offers a higher interest rate up to 7.35%, an online account opening procedure through an online FD form, additional FD rates for senior citizens, and many other attractive features such as periodic interest payouts, loan against FD, multi-deposit facility, and more.