Post Office FD vs Bank FD: Alongside their jobs, people are fulfilling their aspirations of earning money through Fixed Deposits (FDs) in banks and post offices. Everyone wishes to save some money while employed. While many invest in the market, there are others who prefer not to take risks. But worry no more.
We are going to explain how you can earn money through FDs in banks and post offices. Investing in an FD here can help your money grow rapidly. In the post office, FDs are known as ‘Time Deposits’ (POTD). To avail of this, one needs to open an account. Below, you can understand the returns you would get on an FD of ₹50,000.
Know where your money remains safe
When it comes to money, the primary concern is investing it safely. Regarding the post office, it operates under the Central Government. The government bears the responsibility for every single rupee deposited there; this is known as a ‘sovereign guarantee.’ Money deposited in the post office is never at risk of being lost.
That is why the post office is the preferred choice for the elderly. As for bank FDs, opening one with a public sector (government) bank is considered safer than with a private bank. However, deposits (principal + interest) of up to ₹5 lakh in any bank are insured under the DICGC scheme. Thus, your money remains safe in both options.
Which offers higher interest?
In the post office, FDs are referred to as ‘Time Deposits’ (POTD). Currently, the rates are as follows:
1-year FD: Approx. 6.9%
2-year FD: Approx. 7.0%
3-year FD: Approx. 7.1%
5-year FD: Approx. 7.5%
Interest on Bank FDs
Interest rates vary from bank to bank and change periodically. For major public sector banks (like SBI or PNB), rates range between 6.50% and 7.00% for tenures of 1 to 3 years. Private banks (HDFC/ICICI): Around 7.00% to 7.25%. You can get higher interest rates, ranging from 7.5% to 8.25%, at smaller banks.
It is worth noting that while you can open Post Office FDs for tenures of 1, 2, 3, or 5 years, banks offer FDs with tenures ranging from as little as 7 days up to 15 months. Therefore, if you wish to open an FD for a shorter duration, banks are the best option.
