Post Office TD vs Bank FD: Where Will You Get Higher Returns? Know With One Click

Post Office TD vs Bank FD: If you’re in search of a secure investment choice with assured returns, fixed deposits (FDs) and post office time deposits (TDs) might be excellent alternatives. Today, we will discuss these two schemes and where you can invest to achieve the best returns. Let’s dive into the specifics.

Post Office TD vs. Government Bank FD

The Post Office TD scheme operates similarly to a Post Office FD, where investors put in a lump sum and receive a fixed interest rate. For a 5-year Post Office TD, investors can expect a 7.5 percent interest rate. In contrast, most public sector banks provide 5-year FDs with interest rates ranging from 6 to 6.30 percent. Here are the interest rates for 5-year FDs from public sector banks:

SBI – 6.05 percent
BOB – 6.30 percent
PNB – 6.10 percent
Indian Bank – 6 percent
Bank of India – 6 percent
Canara Bank – 6.25 percent

The Post Office TD scheme offers better interest rates compared to a 5-year fixed deposit (FD) from a public sector bank. Therefore, if you’re considering an investment, the Post Office TD scheme might be worth your attention.

Tax Saving Benefits Too

One significant benefit of the 5-year TD scheme from the Post Office is that it allows for tax exemption under the old tax regime. This means investors can not only earn higher interest but also enjoy tax savings.

Regarding security, Post Office TDs are backed by the government, ensuring that both the principal amount and the interest earned are completely secure. In contrast, bank FDs are only insured by DICGC up to ₹5 lakh. However, when making an investment, it’s crucial to consider not just the interest rate but also other aspects like online banking, rules for premature withdrawal, and customer service.

Highest interest rates on 3-year bank FDs

Many private banks still offer higher interest rates than post office FDs. DCB Bank, RBL Bank, and Yes Bank lead the way with 7.50% per annum on 3-year FDs. Bandhan Bank and IndusInd Bank offer 7.25% per annum, followed by Canara Bank at 7.20% per annum. Bank of Baroda is also slightly ahead with 7.15% per annum.

On the other hand, Axis Bank, HDFC Bank, ICICI Bank, and Kotak Mahindra Bank offer 6.90% per annum interest on 3-year FDs for ordinary citizens. This is 0.20% lower than the interest rate offered by post office FDs. Several public sector banks, such as SBI, Union Bank, PNB, and Indian Bank, offer interest rates ranging from 6.25% to 6.75% on 3-year FDs for the general public.