Whenever a common man thinks of keeping his hard-earned money safe and increasing it, the first thing that comes to his mind is the bank’s FD (Fixed Deposit). This has been a trusted method for us for decades. But, what if I tell you that there is also an old and trusted place where your money can get more security and more interest than the bank.
This place is the post office, and a ‘secret’ scheme is hidden here, which is now being rapidly discovered by smart investors. Post Office Time Deposit (Post Office FD) is a better scheme than an FD that gives bumper profits along with safe investment.
What is this unknown post office scheme
The name of this scheme is – Post Office Time Deposit (POTD). It is also called ‘Post Office FD’ in common parlance. It works just like a bank FD. You deposit your money in it for a fixed period and get guaranteed interest on it. This scheme is available in 1, 2, 3, and 5-year options. Although it is not as popular as PPF or Sukanya Samriddhi Yojana, it is no less than any other in terms of returns and security.
Why is this scheme still hidden
If this scheme is so great, then why is it not as famous in every household as PPF? There are some interesting reasons behind it being ‘unknown’. Banks promote their FD schemes heavily. You will see their advertisements on TV, newspapers, and digital platforms. But the post office does not aggressively market its schemes.
Agents get good incentives for selling bank FDs. There is no such big incentive in post office schemes, so agents also do not show much interest in promoting them. Even today, the image of a post office in the minds of many youth is only of letters and parcels, whereas it works like a modern bank.
Why is the post office FD better than FD
Now, let’s talk about why people are suddenly rushing towards this scheme. There are three big and powerful reasons for this:
Strong interest rate
Today, most of the big banks are giving interest ranging from 7% to 7.25% on a 5-year FD. On the other hand, you get a tremendous interest of 7.5% on the 5-year time deposit scheme of the post office. This difference may seem small, but in the long term, it makes a difference of thousands of rupees. Post office time deposit for 1 year gives 6.9% interest, while the average in the bank is 6.8% to 7.0%. Similarly, 7.0% interest is available for 2 years, 7.1% for 3 years, and 7.5% for 5 years, which is much better than the bank’s FD rates.
‘Government guarantee’ of 100% security
This is the biggest Brahmastra of this scheme. Only your investment up to ₹ 5 lakh in the bank is protected under DICGC, but every post office scheme has a ‘government guarantee’. This means that even if there is an economic crisis in the country, the Government of India guarantees the return of every penny of yours. Every rupee of yours, be it ₹ 10 lakh or ₹ 1 crore, is completely safe.
Double benefit of saving tax (80C)
This is a hidden benefit of this scheme, which very few people know about. If you invest in a 5-year post office FD, you also get the benefit of 80C tax exemption up to ₹ 1.5 lakh under section 80C of the Income Tax Act. This benefit is not available on common bank FDs.
How to open an account and what are the rules
Any Indian citizen (alone or jointly), or a child above 10 years of age, can open this account in their name. You can start with as little as ₹1000. There is no maximum deposit limit. You can open this account by visiting your nearest post office. Just carry your Aadhaar card and PAN card with you.
You can withdraw money before the due date if needed, but there is a penalty for it. This Post Office Time Deposit is one such post office scheme that offers you a perfect combination of security, high interest, and tax benefits.