One of the most popular asset classes that offer guaranteed returns is the fixed deposit. Available for different time periods and with different terms and conditions, a fixed deposit is often considered the safest route for investing. As a result, it is also often the first instrument that investors are advised to invest in. 


However, there are several other terms used alongside fixed deposits that can end up confusing a new investor. You will often hear of time deposits in connection with fixed deposits, which can leave you wondering about the difference between a time deposit and a fixed deposit.


Time deposit vs fixed deposit is a debate as old as the terms have existed. Read on below to learn the difference between the two and assess what works best for your requirements. 

Time Deposit vs Fixed Deposit: Is There a Difference Between Time Deposit and Fixed Deposit?

If asked about the difference between a time deposit and a fixed deposit, it is important to remember that both terms refer to the same product. While consumers refer to these deposits as fixed deposits, bankers often call them time deposits since the deposit is made for a fixed period of time. Both assets work the same way. To invest in either, you need to deposit a sum of money for a certain period of time. The taxation benefits are also the same for both. The debate over time deposit vs fixed deposit is one conducted in ignorance since both terms refer to the same product. 


Fixed deposits or time deposits in India are even guaranteed by the government through the Deposit Insurance and Credit Guarantee Corporation of India (DICGC). This means that even if the bank declares bankruptcy and its assets need to be liquidated, you are still entitled to get your fixed deposit back. As a result, it is considered as one of the safest investments to make and continues to be popular among all strata of society. 

Post Office Time Deposit vs Fixed Deposit Comparison Table

While banks and other financial institutions compulsorily offer fixed deposits owing to its universal popularity, post office deposit schemes are a little different. Post office schemes are best used as savings accounts similar to fixed deposits, but they are more commonly called time deposits rather than fixed deposits. 


Read on below to assess the comparison of these two similar kinds of instruments. 


Post Office Time Deposit

Fixed Deposit

Rate of Interest

Ranges from 5.5% to 6.7%

Fixed deposits’ rate of interest generally range from 5.75% to 7.60% per annum

Higher Interest Rates for Senior Citizens


The interest rates offered to senior citizens on fixed deposits are usually 0.25-0.5% higher than the regular fixed deposits. 

Frequency of Interest Payouts


Annual, monthly, or quarterly

Lock-in Period

Ranges from 1-5 years

Ranges from 7 days - 10 years

Option for Auto Renewal

The auto-renewal facility is offered by post offices that have core banking solutions.


Loan Against Deposit Facility

Post office time deposits do not offer loans against deposits. 

Certain banks and NBFCs allow depositors to avail loans against their deposits.

Premature Withdrawal Option

After six months, depositors can make premature withdrawals and not be fined or charged. 

While it differs across financial institutions, certain institutions do provide premature withdrawal at no extra charge.

Tax Deducted at Source (TDS) Applicability 



As is evident from the table above, there are some subtle differences between post office time deposits and fixed deposits. The fixed deposit with financial institutions does offer certain benefits over the post office safe deposits. These include:

  • Fixed deposits offer interest rates that are slightly higher than post office time deposits and even offer even higher interest rates for senior citizens. 

  • Opting for auto-renewal of a fixed deposit with a financial institution is significantly easier since only the post offices that offer core banking services can enable the auto-renewal of time deposits. On the other hand, a fixed deposit with a bank or financial institution can be renewed in a matter of minutes online.  

  • Fixed deposits offer more variety in terms of frequency of interest payouts. Post office time deposits only offer interest payouts annually while  fixed deposits offer a choice between annual, monthly, or quarterly interest payouts. 

  • Fixed deposits also offer more flexibility in terms of tenures. Fixed deposits with banks and other financial institutions offer tenures ranging from 7 days to 10 years, whereas post office time deposits only offer tenures ranging from 1 to 5 years.

  • Loans against deposits are a key facility offered with fixed deposits through which you can avail pre-approved loans against your deposits. However, this is a facility not offered by post office time deposits.


While fixed deposits with banks and other financial institutions do offer these benefits, it is important to remember that post office time deposits do not enforce tax deducted at source, while TDS is charged on fixed deposits with banks or financial institutions. Now that you know the pros and cons of each instrument, you can choose as per your requirements.

Which One to Choose?

While you don’t really have to make a choice between the instruments since they are the same product bearing different names, you do have to make a choice in terms of the fixed deposit you opt for. It is best to assess the options available to you and compare them to your requirements. This process will help you find the ideal fixed deposit for your requirements.

Read on below to learn about the factors you must consider and use to compare between the different fixed deposits available in the market. 

  • Maximum and Minimum Limits on Deposit:

    You might need to check both the maximum and minimum limits on deposits and see if they meet the amount you are planning to invest.

  • Interest Rates on Fixed Deposits:

    Interest rates on fixed deposits vary from bank to bank. Check multiple ones to find a deposit that offers the highest interest rates and meets your other requirements.

  • Cumulative or Non-Cumulative Fixed Deposits

    Cumulative fixed deposits refer to deposits that enable you to reinvest the interest you have earned over the deposit period at regular intervals. However, on a non-cumulative fixed deposit, the interest rate gets credited into the FD account either monthly or yearly. Cumulative deposits let you compound and reinvest the interest with the principal amount, which is beneficial for long-term deposits. However, for pensioners or those with no other source of income, a non-cumulative fixed deposit might be better since they require some funds at regular intervals to meet their needs.

  • Term or Period of Deposit:

    The tenure offered by different banks ranges between 7 days to 20 years. Assess your requirements and then find the financial institution offering fixed deposits for that tenure.

  • Premature Withdrawal Facility:

    Premature withdrawal refers to a depositor wishing to withdraw their deposit before the deposit’s date of maturity. While some banks and financial institutions charge a certain fee or fine on premature withdrawals, there are several others that don’t.

  • Loan Against Fixed Deposit:

    The ability to avail a loan against your fixed deposit is a highly beneficial feature of investing in fixed deposits. The deposit acts as a mortgage, and you can repay the loan more conveniently.

  • Taxation:

    Fixed deposits are among the best ways to save on tax payments. Many banks and financial institutions offer fixed deposits with 5-year tenures, which make the depositor eligible for benefits under Section 80C of the Income Tax Act, 1961. However, it is important to remember that these 5-year fixed deposits are not eligible for premature withdrawal, and you are required to lock them in for 5 years.


As an investment tool, fixed deposits are among the best owing to the security and guaranteed returns they offer. However, it is best to assess your requirements and then opt for the fixed deposit that best meets your requirements. A FD calculator helps you compute the amount that you get at maturity from your investment based on the interest rate prevailing for the chosen tenor. The FD calculator will aid you calculate FD rates for different tenors from different banks, in turn making it easier for you to decide which tenor and bank gives you the maximum returns for your FD.

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The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of 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. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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What Is a Time Deposit?

A time deposit can be defined as a bank account which has a pre-decided maturity date. 

What are the risks of time deposits?

The risks of time deposits include liquidity, inflation, default, reinvestment, etc. 

Where can I buy a time deposit?

You can purchase a time deposit in any private or public bank. 

What Is a Time Deposit Account?

A time deposit bank is interest bearing and has a fixed date of maturity. 

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