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Post Office Fixed Deposit Interest Rates 2020

Post Office Fixed Deposit

Post office saving schemes have been a preferred investment option since ages. One of the most popular saving schemes offered by Indian post offices is the Post Office Fixed Deposit. Generations have safely locked away their hard-earned money in Post Office Time Deposits or Fixed Deposits as the returns on these deposits are backed by the sovereign guarantee of the Government of India. Therefore, your money is always safe since the Government has liquidity available at all times.

Get assured returns up to 8.05%* by investing in Bajaj Finance Fixed Deposit and benefits like multi-deposit, loan against FD, auto-renewal and more. Invest Online.

A post office is available in the remotest corner of the country and even a person with no access to banking facility can go ahead and open a Post Office Fixed Deposit at the nearest postal centre. To extend the serviceability, the central government has now also allowed all public and private sector banks provide the facility of opening Post Office Fixed Deposit.

Let us look at salient features and various aspects of this investment option.

Post Office FD Interest Rate:

Post Office Fixed Deposit interest rates are decided by the Government of India (every quarter) under the Small Saving Schemes. These rates are in turn determined as per the performance of government securities/bills. Post Office Fixed Deposit with a tenor of 5 years has an interest rate mark-up of 25 bps over the yield of comparable government securities.

Post Office Fixed Deposit interest rates for different tenors as on January 1, 2020, are as indicated in the table below:

Tenor Interest Rate
1 year 6.9%
2 year 6.9%
3 year 6.9%
5 year 7.7%

Features and Benefits of Post Office FD

  • Investment amount – Only one deposit can be created for one specific amount. The minimum amount is Rs. 200 and there is no limit on the maximum amount. However, the amount should be in multiples of Rs. 200 only.
    Only one deposit can be made in one account. However, you can create any number of accounts in any post office.
  • Integration with the savings account – You can also instruct the post office to redirect the interest earned to your post office savings account which will continue to earn the post office interest rate of 4%. However, the savings account should be at the same post office. Also, this facility is available only at Head of Departmental sub-offices.
  • Integration with Post Office Recurring Deposits – You can put an application every year to direct the monthly interest payments to a 5-year post office recurring deposit. Again, the post office savings account should be at the same post office and this facility is available only at Head of Departmental sub-offices.
  • Taxation – A 5-year Post Office FD attracts tax exemption under Section 80C. There is no tax benefit on fixed deposits having tenor less than 5 years. Any interest earned on such deposits needs to be added to the annual taxable income and is liable to be taxed as per the applicable tax rate.
  • Maturity – Upon maturity, you can fill out a form for renewal. In case the post office is equipped with the post office CBS system, you can avail the facility for auto-renewal.
  • Premature withdrawal – Premature withdrawal before six months is not allowed. If you exit between 6 months-1 year timeframe, you will only earn interest as applicable on post office savings account. Thereafter, you can exit with a penalty of 1% on the interest rate.

Post Office FD vs. Company FD

While you can think of redirecting the interest earned from Post Office FD into various other post office schemes, you should also consider alternative options such as high-yielding company FDs offering a similar guarantee and zero to low risk.

Even though post office FD may offer a higher interest rate as compared to bank FD, it cannot match the interest rate offered by Company FDs. You can ensure maximum returns with company FDs which are guaranteed by well-financed and liquid companies like Bajaj Finance. Let us see how you can benefit even further with a Bajaj Finance FD.

  • Interest rate – Bajaj Finance FD offers higher interest rates up to 8.05% which is higher than any other fixed-income option in the current state of the economy. A post office FD will allow a maximum of 7.7% and this can get further reduced if the G-sec yield falls.

You can earn ROI up to 47% with Bajaj Finance FD by investing Rs. 1,00,000 as shown in the table below:

Customer type Interest Rate Interest amount Growth in savings
New customer 7.80% Rs. 45,577 45.57%
Existing customer 7.90% Rs. 46,254 46.25%
Senior citizen 8.05% Rs. 47,273 47.27%
  • Flexibility Bajaj Finance FD offers flexible terms for premature withdrawal (as compared to Post Office FD). It also provides an option to avail loan against FD at a marginal interest rate.
  • Ease of access While a post office FD may not offer you many online features, you can easily open and access Bajaj Finance FD account online. Doorstep document pickup and auto-renewal feature make it even more convenient. You can open Bajaj Finance FD account using a debit card at a few locations.

You can also calculate your returns on Bajaj Finance FD using online fixed deposit calculator.

  • Multi-deposit facility Bajaj Finance FD offers a multi-deposit facility that allows you to invest in multiple FDs using a single lumpsum amount. This helps you ladder your investments across different interest rate buckets, thereby ensuring maximum returns during changing interest rate scenario.
  • NRI FD NRIs are not allowed to invest in Post Office FDs. However, NRIs can easily invest in Bajaj Finance FD and safeguard their investment against market volatility.
  • Credit ratings Bajaj Finance FD carries the highest stability ratings of FAAA/Stable by CRISIL and MAAA/Stable by ICRA. This is comparable to sovereign backing, along with the added advantage of a higher interest rate.

The table below briefly summarize the differences between Post Office FD and Bajaj Finance FD:

                                                                                                                                                                                                                                                                                                                                                                                                                                       
FEATURE POST OFFICE FD BAJAJ FINANCE FD
High-Interest Rate No Yes
Quarterly Interest Rate Revision Yes No
Flexible Premature Withdrawal No Yes
Online Account Management No Yes
Multi-deposit Facility No Yes
Auto-Renewal Facility Only at CBS-enabled branches Yes
NRI FD No Yes

With trillions of assets under management and a total deposit book size of 16000+ crores, you can trust Bajaj Finance FD to give you maximum returns with the lowest risk.