Are you planning to invest in Post Office deposits? Do it now. Rate cuts likely1 min read . Updated: 30 Sep 2019, 09:51 AM IST
- It is likely that the interest rate on Post Office deposits will be reduced
- So if you are planning to invest in FDs offered by the post office, this is the right time to do so
Just like banks, Post Office also offers time deposit (TD), also known as fixed deposit (FD) saving schemes to its customers. The interest offered on these saving schemes are reviewed quarterly by the government. The government is expected to announce the interest rate on savings scheme offered by the post office in a couple of days. And seeing the trend of the banks, it is likely that the interest rate on post office fixed deposit, recurring deposit (RD) accounts and others saving schemes will also be reduced. The move is aimed at matching the softening of interest rates in the banking sector since the RBI cut its benchmark policy rate.
So if you are planning to invest in FDs offered by the post office, this is the right time to do so. The interest on Post Office deposits was revised on 1 July 2019. For one-year time deposit, Post Office offers an interest rate of 6.9%. For time deposit for a tenure of 2 and 3 years, it offers an interest rate of 6.9%. For five-year time deposit account, Post Office offers an interest rate of 7.7%. The interest rate offered by post office for different tenure are better than country's largest lender State Bank of India (SBI). For deposits maturing in less than one year, SBI offers 5.80% interest. For FDs maturing in 1 year to less than 2 years, the bank gives 6.50%. And for term deposits with maturity period 2 years to 10 years, SBI gives 6.25% interest.
Earlier, the interest rates on public provident fund (PPF) and other small savings instruments were cut by 10 basis points for the July-September quarter.
The minimum amount required to open Post Office FD account is ₹200 and in multiples thereof. However, there is no maximum limit. Investments made under the 5-year fixed deposit account qualifies for income tax benefits under Section 80C of the Income Tax Act.