Post Office Deposits or Bank Deposits, Which One is Better for You?

By First Posted: Jun 11, 2020 Thu 2:28 PM Updated: Jun 19, 2020 Fri 7:12 AM
Post Office Deposits or Bank Deposits, Which One is Better for You?
Image Credit: Pinterest

This is no new news that interest rates are rising for deposit rates. So does that mean bank deposits could now be a better option to post office savings?

Well, to shower some light on the matter, please find below the agenda and process of both the deposit schemes.

A post office recurring deposit account (RDA) is similar to a recurring deposit in a bank, where you can invest a fixed amount on a monthly basis. The postal RDA has a fixed tenure of five years.

These deposits amass money at an annual fixed rate of interest of 8 per cent. The interest is compounded on a quarterly basis. The minimum investment in a post office RDA is Rs 10 and there is no prescribed upper limit. For example, if you invest Rs 100 every month in 60 instalments, you will earn a sum of Rs 7,289 after 5 years.

Banks, however, offer a flexible time period on their recurring deposits. You can open an RDA for a minimum period of 6 months, and thereafter in multiples of 3 months up to a maximum period of 10 years. The benefit with post-office deposits is that it offers a fixed rate of return for the duration of the deposit, while banks constantly review their recurring deposit rates. However, the disadvantage with post office savings is that that in the age of convenience banking, you will have to visit the post office every month. In case of banks, the amount is automatically debited from your account.

Well, there are pros and cons in both of the deposit schemes. In the post-office scheme your investment grows at a pre-determined rate with no risk as it is backed by the government but bank deposit scheme might differ with the agenda.



Most Read