For some time, bank fixed deposit (FD) rates have been increasing, giving investors the chance to earn more on their term deposits.
However, fixed deposits are not just provided to investors by banks. Even post offices provide fixed deposit options for a variety of terms that are very similar to bank fixed deposits.
Are they the same, then? Which one should you choose based on how post office deposits differ from bank fixed deposits? Let’s look at it.
Bank FD Vs Post office FD: The first difference between post office FDs and bank FDs is that post office FDs are government schemes and are linked with government schemes. Therefore, they are least affected by volatility in interest rates.
Interest rates offered on bank FDs, on the other hand, depend on the central bank rate revisions, and therefore, change more frequently. Also, different banks offer different FD rates.
Interest Rate: Post office FDs offer an interest rate of 5.5 per cent, 5.7 per cent, 5.8 per cent, and 6.7 per cent for one year, two years, three years, and five, years respectively.
For banks, there is no uniform rate. The country’s largest lender, the State Bank of India, for instance offers a rate of interest of 6.10 per cent, 6.25 per cent, 6.10 per cent, and 6.10 per cent for one year to less than two years, two years to less than three years, three years to less than five years, and five years up to 10 years, respectively.