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SBI Fixed Deposit Vs Post Office Term Deposit Schemes
The fixed deposits are considered as one of the best tax saving schemes, especially if they have a tenure of more than five years. However, currently, when SBI fixed deposit rates and fixed deposit rates of other banks are going down, small saving schemes like post office term deposits are lucrative investment schemes for the investors who have a low-risk appetite. For the information of these investors, the term deposits of the post office as well offer IT exemption if they deposit their money for five years.
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as 7.1%##
Includes life cover
Completely Tax free^
as 7.1%##
Includes life cover
Completely Tax free^
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- SBI Fixed Deposit Vs Post Office Term Deposit Schemes
While comparing the rate of interest offered by the State Bank of India fixed deposits for a tenure of five years and post office term deposit for the same tenure, the difference comes around 1.3%. On one hand, where SBI fixed deposit rates are 5.4%, the other hand, post office term deposits offer an interest rate of 6.7% when the investment is made for five years. In fact, from 01st April 2020, the new interest rates for post office term deposits have come into picture wherein for one year, two-years, and three years fixed deposits are 5.5% whereas, for fixed deposits of five years, the rate of interest is 6.7%.
So, for illustration, if we invest Rs.1 Lakh for five years in State Bank of India Fixed Deposit account and the same amount for the same tenure in Post Office Term Deposit, then SBI Fixed Deposit will give Rs. 64, 362 as interest, and the final amount will be Rs. 1, 64, 362. Whereas in the Post Office Term deposit, this money will become Rs. 2, 00, 016 in five years. This clearly shows that money will be doubled in post office term deposit in comparison to fixed deposits of SBI.
Information About
Guaranteed Return Plans
Returns Before Tax
7.5% (TAX-FREE)
Returns After Tax
7.5%
Guaranteed Returns
Yes
Life Cover
Yes
Tax on Profit
Tax Free*
Risk
No Risk
Fixed Deposits
Returns Before Tax
7% (TAXABLE)
Returns After Tax
4.8%
Guaranteed Returns
Yes
Life Cover
No
Tax on Profit
Taxable
Risk
Low Risk
Debt Mutual Fund
Returns Before Tax
8% (TAXABLE)
Returns After Tax
5.5%
Guaranteed Returns
No
Life Cover
No
Tax on Profit
Taxable
Risk
High Risk
*For annual premium upto ₹5 Lacs
Therefore, despite being the same as bank fixed deposits, post office term deposits provide guaranteed returns. Here, we are providing a comparison of SBI Fixed Deposit scheme and Post Officer Term Deposits:
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For fixed deposits of State Bank of India, the tenure can vary from seven days to 10 years according to the requirement of the investment, whether it is for a short tenure of seven days or long term of 10 years. However, the term deposit schemes of Post Office are for one year, two, three, or five years.
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An SBI Fixed Deposit account can easily be opened online by using the facility of net banking. However, for opening a term deposit account with Post Office, one has to visit a branch of the post office.
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The interest rate of SBI Fixed Deposit ranges between 2.90% to 5.40% for the general public. Post Office Fixed Deposit interest rates range from 5.50% to 6.70%.
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The USP of term deposit schemes offered by Post Office is that it is a government scheme and its interest rates are revised every quarter. However, in the case of State Bank of India fixed deposits, there is no rule like this. The fixed deposit rates of banks get affected by the repo rate of the Reserve Bank of India.
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Account portability is allowed in both SBI Fixed Deposit accounts and Post Office Term Deposit schemes.
You May Also like to read: National Savings Certificate Vs Fixed Deposits
Latest SBI Fixed Deposit Rates:
| Tenure | FD Rates for Normal Public | FD Rates for Senior Citizens |
| Seven Days - 45 Days | 2.90% | 3.40% |
| 46 Days - 179 Days | 3.90% | 4.40% |
| 180 Days - 201 Days | 4.40% | 4.90% |
| 211 Days - 364 Days | 4.40% | 4.90% |
| One Year - One Year 364 Days | 5.10% | 5.60% |
| Two Years - Two Years 354 Days | 5.10% | 5.60% |
| Three Years - Four Years 364 Days | 5.30% | 5.80% |
| Five Years - 10 Years | 5.40% | 6.20% |
FD interest rates India have fallen consistently over the last 12 years.
Latest Post Office Term Deposit Rates:
| Tenure | Post Office Term Deposit Rates for Normal Public | Post Office Term Deposit Rates for Senior Citizens |
| Seven Days - One Year | 5.50% | 5.50% |
| One Year One Day - Two Years | 5.50% | 5.50% |
| Two Years One Day - Three Years | 5.50% | 5.50% |
| Three Years One Day - Five Years | 6.70% | 6.70% |
Summing It Up
Being a wise investor, it is advised to nurture all the options of the investment and after that make an informed decision of investment. Even though both SBI and Post Office are government-backed up schemes, where your money is safe, but after seeing the rate of interest and final amount upon completion of the maturity period Post Office Term Deposits are recommended. In addition to this, the Post Office also offers many other investment schemes like National Savings Certificate, Senior Citizens Savings Scheme, Kisan Vikas Patra, Public Provident Fund, Monthly Income Scheme, etc. Almost all these schemes offer an interest rate that is more than seven percent and in addition to this, the rate of interest in these schemes is revised every quarter. So, it is up to the investor what he/she selects as deciding according to his/her requirements is always suggested.
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* Applicable for Titanium variant of Max Life Smart Fixed-return Digital (Premium payment of 5 years, Policy term of 10 years) and a healthy male of 18 years old paying Rs. 30,000/- monthly (exclusive of all applicable taxes)
** Fixed deposit rate applicable for 5 year's 1 day to
10 years for investment amount less< 2 Crore ( Not for senior citizens).
*** PPF interest rate applicable for 15 years
for investment amount upto 1.5 Lac
+ Trad plans with a premium above 5 lakhs
would be taxed as per applicable tax slabs post 31st march 2023
#Discount offered by insurance company
## The Guaranteed Returns are dependent on the policy term and premium term availed along with the other variable factors. 7.1% rate of return is for an 18 years old, healthy male for a policy term of 20 years and premium term of 10 years with Rs.10,000 monthly installment premium. All plans listed here are of insurance companies’ funds.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
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