A lot of people plan to accumulate funds for investment but find it difficult to save enough. It makes sense for such investors to save on a monthly basis. Recurring deposits (RD) account is the best option for such investors. An RD account can be opened with a bank or a Post Office. Both State Bank of India (SBI) and Post Office offer RD options to their customers. You can choose a fixed amount to invest every month over a period of time.
Here is a comparison of RD accounts offered by SBI and post office:
1) For an SBI RD account, the term of deposit may vary between 12 months and 120 months, but Post Office offers RDs for a tenure of 5 years only.
2) SBI RD interest rates vary between 6.4% and 6.85 % for regular customers whereas Post Office RDs offer quite high interest rate of 7.3% per annum, compounding quarterly.
3) You can open an SBI RD account online through net banking facility, but for opening a Post Office RD account you have to visit the post office branch.
4) In SBI RD account, customers are required to make monthly deposits of minimum of ₹100 and in multiples of ₹10. There is no maximum limit on the deposits. But the minimum amount required for opening a Post Office RD is ₹10 per month, or any amount in multiples of ₹5. However, there is no maximum limit on investment.
5) SBI imposes penalty charges for non-deposit of monthly installments in case of an RD account. For account of period five years and less, the bank charges ₹1.50 per ₹100 per month and for above five years, SBI charges ₹2 per ₹100 per month. In case of a Post Office RD account, if the subsequent deposit is not made up to the prescribed day, a default fee of ₹0.05 for every ₹5 is charged. After four regular defaults, the account is discontinued and can be revived in two months but if the same is not revived within this period, no further deposits can be made.