Which is Better, a Post Office FD or a Bank FD?

What is the purpose of your investment? It is according to that, and you can make investments – not the way the market can sway you. But, the truth – the market has several shifts altogether. Here, let us talk about the important schemes in the market for a while now.

Fixed deposits

Let us talk about the most sought fixed deposits – fixed deposits from the post office and fixed deposits from the bank.

It could be confusing to choose one, but here you can look at both of them up against one another to know which one is for you.

What is a Fixed Deposit?

A Fixed Deposit is a safe, secure, and stable investment choice that is widely regarded as the most secure investment instrument for anyone seeking a constant and steady income in the form of interest. In India, any native Indian citizen can open a Fixed Deposit Account.

Now, post offices and banks offer you fixed deposit schemes – but how will you choose one? Here is the answer to that.

A Fixed Deposit from the Post Office

Well, a post office fixed deposit is a good and credible scheme – it is for the ones that want to invest in smaller portions, and it is backed by the government. It is best for the people like housemakers, children, and people belonging to the low-income group. The interest that you earn in this scheme is also exempt from TDS – great, right?

Let us look at the post office FD interest rate 2022 to understand it better.

Post Office FD Interest Rates 2022

  • For 1 Year – 5.5%
  • For 2 Years – 5.5%
  • For 3 Years – 5.5%
  • For 5 Years – 6.7%

Features of a Post Office FD Scheme

  • The post office FD scheme has a tenure of 1,2,3, and 5 years.
  • If you invest in this scheme, you need to make a minimum deposit of Rs.1000.
  • The interest rates, as already stated above, it is from 5.5% to 6.7%.
  • The interest payment for the post office is every year.
  • You can make payments into this scheme through cash or through cheque.
  • You can also prematurely withdraw your money in 6 months of the investment.
  • You can also nominate someone you wish to with the scheme.

You know what? You can also use a Post office FD calculator to know how many returns you will make with your FD. So, why do you let these free tools go? Use it to analyze better if you want to invest in the post office FD.

What About the Taxes on Post Office FDs?

You know the best thing about a Post office FD? TDS is not deducted on the interest earned. As is it designed especially for the low-income group, tax liability is taken away from their shoulders.

When filling your Income Tax, you can add investments of fixed deposits in the post office to claim deduction under section 80C. The upper limit for deductions under the section of the IT Act, 1961 is maxed at Rs.1.5 lakh for every financial year.

FDs in a Bank

Pretty much all of the banks today will offer you a fixed deposit. It is also quite similar to a fixed deposit of a post office but with some different terms and conditions. In a bank FD – you can also connect with the current bank you hold a savings or salary account with – it makes things easier with a familiar bank.

You can open a fixed deposit account in a bank anywhere, terming from 6 months all the way to 10 years. But every tenure has a different interest rate.

Well, unlike the post office – every bank has a different interest rate. So, here are the interest rates of some top banks in the year 2022.

Bank FD Rates in 2022

  • HDFC Bank FD – 2.50% to 5.60%
  • Axis Bank FD – 2.50% to 5.75%
  • Bank of Baroda FD – 2.80% to 5.25%
  • IDFC Bank FD – 2.50% to 6.00%
  • Punjab National Bank FD 2.90% to 5.25%
  • Bank of India FD – 2.85% to 5.05%
  • Punjab and Sind Bank FD – 3.00% to 5.30%
  • State Bank of India FD – 5.30% to 5.40%
  • Canara Bank FD – 2.90% to 5.40%

Also, just the way you can use the post office FD calculator – you can also use the bank FD calculator for different banks. A tip:- always use it because knowing your returns motivates you to save more!

Comparing Post Office FDs and Bank FDs

Well, if you look at the interest rates of the two options, you will know which option you want to choose. Now, though you would know this, just giving you clarity – bank rates vary over different banks and regions, but post office rates remain the same everywhere in the country.

Final Thoughts

If you are pacing back and forth thinking about the best choice between the two options you have been given – you can choose one based on your financial goal. It can either be based on the interest rates, tenures, and so much more.


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