Post Office Fixed Deposit Schemes – Detailed Analysis

Post office fixed deposit is a saving cum investment instrument offered by the Government of India, extended via the Indian Postal Services.

These are primarily categorised as small savings schemes, offered against sovereign guarantee backed by the central government.

Post office FD is considered as one of the most popular types of investment options available in India, primarily because of the assured, high-yield offered after the investment period. 

Investing in Post Office FD

These FDs offer a flexible investment tenor, ranging from 1 to 5 years, against an attractive post office interest rate. As of 1st July 2019, the applicable interest rate is the following – 

  • 6.9% for 1 year, 2 years, and 3 year FD accounts.
  • 7.7% for 5 years FD accounts.

Post office fixed deposits are ideal for individuals with a low-risk appetite. A healthy rate of interest along with assured returns is what makes FD better than any other investment and beneficial for first time investors or individuals looking for guaranteed wealth accumulation.

Details regarding post office fixed deposit

Post office FD account can be opened with a minimum investment of Rs.1000, which can be increased in multiples of Rs.100.

The accumulated interest is calculated on a quarterly basis; however, it is disbursed annually. 

Any individual above 10 years of age can opt for an FD account. Minors below the age of 18 will require a guardian on behalf of themselves to operate the account.

Other than that, investors can also opt for a joint account with a maximum of 3 adults. Single accounts can be converted to joint FDs, and vice versa, according to an investor’s discretion. 

Another significant benefit of post office fixed deposit is the nomination facility. It adds further safekeeping of funds in case of untimely demise of the account holder.

An investor can select a nominee while opening an account, or during any stage of the investment’s tenor.

Benefits of post office FD

Along with an attractive post office interest rate, there are several other benefits of this type of FDs that an individual can enjoy. 

These include – 

  • These accounts can be transferred from one branch of a post office to another at the discretion of the investor. 
  • The Government of India also allows investors to open any number of FD accounts as per their financial requirements. 
  • Premature withdrawal of the fixed deposit is not allowed before a minimum lock-in period of 6 months. In case the account is liquidated during a period of 6 to 12 months, standard savings account interest rates will be applicable. It makes premature withdrawal of fixed deposits not financially advisable. 
  • There is no maximum limit that can be deposited in a post office FD. Individuals can benefit from higher wealth accumulation with post office interest rate by investing a larger sum.

Investors can open their FD account online by using mobile banking or net banking facilities. It allows prospective investors to avoid the lengthy application process and save both time and effort.

Also Read: How To Check Provident Fund Status?

Documentation required while opening a post office FD

Investors need to submit only minimum paperwork while opening a post office FD.

Take a look at the required documents –

  • Specimen signature slip.
  • Pay-in-slip (SB103).
  • Duly filled application form.

If someone requires to transfer an FD account from one branch to another, he/she will have to submit form SB10(b) with necessary information regarding the existing branch and the branch to be transferred to.

If an investor aims for even higher wealth accumulation, he or she can opt for an FD from other financial institutions as well.

Companies like Bajaj Finance offers interest rates of up to 8.10%, which can help accumulate a significantly larger sum for a similar investment tenor. Moreover, senior citizens can enjoy an additional 0.25% interest over and above the existing rates. 

Although the minimum account balance is higher, i.e. Rs.25,000, the significant return makes Bajaj Finance Fixed Deposits ideal for all types of investors.

These instruments are also rated stable by CRISIL and ICRA, ensuring assured returns against the invested sum. Investors can also benefit from Systematic Deposit Plan to grow their investment in a disciplined manner over time.

Author Bio:

Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory.

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