Tax-saving bank FDs or 5-year Post Office Time Deposit: Which offers higher interest now?
Post Office FD, also known as Post Office Time Deposit (POTD) is a deposit scheme of the Indian Postal Department. It is backed by the government, so it’s a relatively safer financial product. Interest rates on post office deposits are fixed by the government and revised quarterly. India Post offers deposits with tenure of one year, two years, three years and five years. Interest rates on these tenures are payable annually but calculated quarterly.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} The distinct advantages offered by bank and post office FDs meet various requirements of customers. Post office FDs provide security and consistent returns, whereas bank FDs offer convenience, a variety of tenures, and extra services like easy internet banking.
Special FD offering up to 8.10% interest rate: Invest in these special FDs offering high interest rate before December 31, 2024
Furthermore, bank FDs have additional features like liquidation and overdraft facility, which attracts many investors.
Here is a quick comparison of FD interest rates offered by top banks and Post Office Time Deposit for general citizens to help them make informed decisions that align with their financial goals.
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5 year-Post Office Time Deposit (POTD)
Post Office Time Deposit (POTDs), which have a five-year tenure, also provide tax advantages. You can claim a tax deduction of up to Rs 1.5 lakh by investing in a five-year Post Office Time Deposit under Section 80C of the Income Tax Act, 1961.The interest rate offered on a 5-year Post Office Time Deposit is 7.5% for October to December 2024.
Tax-saving FDs
Under Section 80 C of the Income Tax Act, 1961, investments made in tax-saving FDs are eligible for a tax deduction of up to Rs. 1.5 lakh. The tenure of the tax saving FD is 5 years. However, you cannot prematurely liquidate or withdraw these FDs, unlike conventional FDs.
Interest rates differ from bank to bank. For general residents, State Bank of India (SBI) gives an interest rate of 6.50% on tax-saving FD, HDFC Bank and ICICI Bank offer interest rates of 7%.
Banks offering high interest rate on tax saving fixed deposit
Here is a list of some banks offering high interest rates on fixed deposits.
Bank NameTax SavingDCB Bank7.4Dhanlaxmi Bank7.25Indusind Bank7.25Yes Bank7.25City Union Bank7.1
Which is better: Bank FD or Post Office Time Deposit?
According to the IndusInd Bank website, “The decision about which is better between bank FD vs post office FD primarily hinges on personal preferences and financial objectives. Post office FDs might be the superior choice for those prioritising higher interest rates and security backed by the government. These FDs are particularly appealing to risk-averse investors seeking government assurance. On the other hand, bank FDs may be more enticing to investors looking for convenience, flexibility, and competitive interest rates offered by various banks.”
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This story originally appeared on: India Times - Author:Faqs of Insurances
