Fixed deposits (FDs) are highly preferred investments in India, especially in times of high market volatility and economic uncertainty. This is because they are safe, easy to understand, and fairly liquid.
There is no doubt about the relevance of fixed deposits in long-term financial planning. However, you should remember that FDs can be further classified into those provided by NBFCs, banks, and post offices.
Post office fixed deposits are similar to those issued by banks, in the sense that you invest money for a predetermined rate and period. Here is a quick comparison between the two investment avenues:
Parameters |
Post Office FD |
Bank FD |
Ease of Investment |
Need to open a savings account with India Post to book a Post Office FD online |
Can be opened online or offline |
Interest Rates |
Comparatively lower than regular FDs |
Higher |
Special Interest Rates for Senior Investors |
N/A |
Yes |
Minimum investment |
₹1,000 |
Minimum amount can vary, depending on the bank |
Tenor |
Up to 5 years |
Up to 10 years |
Security |
Backed by the Government of India |
Up to ₹5 Lakhs insured by DICGC |
While trying to determine which is better, remember that both are safe low-risk investments that offer good return on investments. You should also consider factors like the convenience of online banking and ease of operation.
Before making a decision, consider using an FD calculator to compare and determine your potential interest earnings across different tenors and issuers. On Bajaj Markets, compare the FD interest rates offered by different banks and NBFCs and book an FD right away.
The information provided by BFDL is related to the rates provided by Banks and Deposit taking NBFCs as available from public domain and under no circumstances is intended to be source of advice or recommendation of any financial investment advice or endorsement of any sort. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers and use of such information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. Display of any intellectual property along with the related product information does not imply BFDL’s partnership with the owner of the intellectual property of such products and is solely for the purpose of information, unless otherwise provided by BFDL.
Frequently Asked Questions
Is a 5-year post office FD tax-free?
Yes, you can claim an income tax deduction of up to ₹1.5 Lakhs under Section 80C on 5-year post office tax saver FDs.
Can I open a post office fixed deposit from any post office?
You can open a post office savings account in any post office across India. Once that is done, you can invest in a post office fixed deposit from any post office. Else, you can make the investment on the India Post website or mobile app. You can also transfer your account from one branch to another, at any time.
What are the different tenors offered for FDs issued by post offices and banks?
Post office FDs offer a maximum tenor of 5 years, while FDs issued by banks have tenors ranging from 7 days to 10 years.
Are my funds safe in FDs provided by banks?
Regular FDs issued by banks are insured up to ₹5 Lakhs by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Can I withdraw early from FDs provided by banks and post offices?
Both allow premature withdrawals with penalties. Generally, penalties are slightly lower for Post Office FDs.
Are there tax benefits on FDs issued by banks and post offices?
Yes. Tax-saver FDs offered by banks are eligible for deductions of up to ₹1.5 Lakhs per financial year u/s 80C of the I-T Act, 1961. Post Office FDs offer a unique exemption up to ₹10,000 u/s 80TTA.
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