The term of a term deposit with the State Bank of India can range from 7 days to 10 years. Post office schemes have terms of only 1, 2, 3 and 5 years.
If you’re not sure whether you should invest your money in a Post Office FD or an SBI term deposit, there are several factors to consider.
Post Office Fixed Deposits (FDs) are a safe option for investing your money. The schemes offer returns that are competitive with many bank FDs. Following the Reserve Bank of India’s cycle of re-rate hikes from May 2022, banks have also increased returns on term deposits, with many banks offering interest rates above 7 percent. The National Bank of India offers returns between 3 and 7.5 percent on fixed deposits.
If you are not sure whether you should invest your money in a post office FD or an SBI time deposit, there are several factors to consider.
Duration:
The term of a term deposit with the State Bank of India can range from 7 days to 10 years. Post office schemes have terms of only 1, 2, 3 and 5 years.
Returns:
For the general public, the State Bank of India offers returns between 3 and 7 percent on retail deposits below Rs 2 crore. Seniors receive 0.5 percent extra interest. Below the special Amrit Kalash schedule of the bank, returns can be as high as 7.6 percent. The duration of the Amrit Kalash plan is 400 days.
Post Office term deposits offer interest between 6.8 and 7.5 percent. The interest is compounded annually. There is no special rate for seniors.
Tax Benefits:
Both SBI and Post Offices will provide customers with tax benefits under the Income Tax Act.
Premature recording:
As far as the post office is concerned, no FD can be withdrawn within six months from the date of deposit. If the deposit is closed after six months, but earlier than a year, the Postal Savings Account interest rate applies to the FD.
The SBI FD can also be withdrawn prematurely. A fine is imposed.
Which option to choose between SBI and Post Office FD?
You should consider your financial goals before making a decision. Both State Bank of India and Post Office schemes offer stable returns as they are linked to the government.
If you want to opt for a short-term deposit, SBI may be a better option. For longer term FDs, you can make your decision after considering the yield.
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