Difference Between Post Office FD Interest Rates and Bank FD Interest Rates 2023


6 min read

The Indian Postal department has been serving the people of India with their varied investment policies and products for a long. Here we are discussing the key differences between Post Office FD and Bank FD interest rates for 2023.    

The Postal Department of India has been serving the people of the country with more than 1.5 lakh post offices across the nation with its widely distributed network. Not only does the Indian post department deliver couriers and posts, they have also been serving people with insurance services for a long time now. We have several Post Office schemes such as savings accounts, recurring deposit accounts, and fixed deposit accounts with good interest rates to choose from.

Further, the postal department of India also offers other investment policies such as Postal Life Insurance, Senior Citizen Savings Scheme, Small Savings Schemes, National Savings Certificate etc. for the benefit of the common people.

In this post, we are discussing the Fixed Deposit plans and Post Office FD rates in India.

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Post Office FD Interest Rates 2023

The postal department of India offers FD investment plans with attractive returns. Depending on the tenure of the FD, which ranges from one to five years, the interest rates of post office FD plans are decided. The table below shows the updated Post Office interest rates.

FD Tenure Interest Rate for Regular Citizens Interest Rate for Senior Citizens
1 Year 5.50% 5.50%
1 year 1 day to 2 years 5.50% 5.50%
2 years 1 day to 3 years 5.50% 5.50%
3 years 1 day to 5 years 6.70% 6.70%

Unlike in banks, the Post Office FD schemes do not allow any additional interest to senior citizens as you can see in the table above. Hence, the earnings in post office interest rates are the same for everyone alike.

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Post Office FD vs Bank FD Interest Rates – Comparison Of Post Office FD Interest Rates and Bank FD Interest Rates 2023

Below is a comparison of Post Office fixed deposit interest rate with that of interest rates on FDs offered by Indian banks

Bank Name FD interest Rates 2023 (Banks) For Regular Citizens FD interest Rates 2023 (Banks) For Senior Citizens FD Interest Rates 2023 (Post Office)
State Bank of India 2.9% – 5.5% 3.4% – 6.3% 5.5% – 6.7%
Axis Bank 2.5% – 5.75% 2.5% – 6.5% 5.5% – 6.7%
HDFC Bank 2.5% – 5.6% 3.00% – 6.35% 5.5% – 6.7%
Punjab National Bank 2.9% – 5.25% 3.4% – 5.75% 5.5% – 6.7%
Union Bank of India 3% – 5.5% 3% – 5.5% 5.5% – 6.7%
Canara Bank 2.9% – 5.25% 2.9% – 5.75% 5.5% – 6.7%
Bank of India 2.85% – 5.05% 3.35% – 5.55% 5.5% – 6.7%
IDBI Bank 2.7% – 5.5% 3.2% – 6% 5.5% – 6.7%

Key Aspects of Post Office FD Interest Rates 2023

  • The interest rates of Post Office FDs compounds quarterly and are paid annually
  • Interest rate applied at the first deposit is constantly maintained all through the tenure of the FD
  • A depositors can get the interest amount into their bank accounts directly
  • If the policyholder doesn’t withdraw the corpus at maturity, he/she may not earn any interest on the final amount unless they extend the tenure
  • However, in case the policyholder extends the tenure, the amount received at maturity will earn interest at the existing rate as on the date of extension
  • The policyholder can submit an application form number 4 to make premature withdrawal from the FD account of Post Office after six months of starting account
  • The account holder can submit application form number 3 for extension of the account if they want to extend the tenure after FD maturity
  • In case of death of the account holder, the deposited amount is paid to the nominee

Features of Post Office Fixed Deposit Account

The basic features of Post Office fixed deposit interest rates table 2023 are mentioned below:

Feature Details
Rate of Interest 5.50% to 6.70%
FD Tenure 1, 2, 3 and 5 years
Minimum Deposit Amount INR 1,000
Premature Withdrawal Available after 6 months
Interest Payment Annual
Payment Mode Cheque / Cash
Nomination Facility Available

Advantage of Post Office FD

Below are some of the factors which makes Post Office FD Scheme one of the ideal choices for many:

  • These schemes allow high interest rates
  • These are government schemes and are considered more secure
  • An investor can open an account offline or online as per convenience
  • TDS is not levied on the interest that is earned from a post office FD account
  • The policy allows the account holder to make the deposits individually or jointly for a maximum of three members
  • It is easy to transfer FD account from one Post Office to another
  • You can open more than one FD account in any of the Post Offices
  • Nominees can be added even after opening the account

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Post Office FD – Tax Benefits

This is another huge advantage of investing in Post Office FD since the investor can get tax benefits under this scheme. No TDS is deducted on the post office FD interest earned. Post Office FDs are specially meant for people with low-income and thus these schemes are not levied with tax liability.

However, if the interest amount earned by the investor in a financial year is above INR 40,000 for regular customers and INR 50,000 for senior citizens, they may be levied with TDS. For tax saving, an investor can claim for Post Office FD tax deduction under section 80C of Income Tax of up to INR 1.5 lakh per financial year.

Know More: Post Office Monthly Income Scheme

Eligibility Criteria for Opening a Post Office FD Account

To be eligible for opening a Post Office FD Account, one has to be:

  • The resident of India
  • One can open the FD account either individually or jointly
  • The minors can open a post office FD account under the guidance of legal guardian
  • No companies, organizations, trusts, and NRIs, can avail of the facility of FD account

Documents Needed for Opening a Post Office FD Account

You must provide the below-mentioned documents to open an FD account in a Post Office:

  • Form-1 or application form to open FD account
  • Address Proof like telephone bill, electricity bill, passport etc.
  • Identity Proof like Pan Card, Aadhaar Card, Voter ID Card etc.
  • Nominee details

Read More: How to Pay Post Office Recurring Deposit (RD) Amount Online?

Post Office FD Calculator 2023

Once you are sure about your investment in the post office FD scheme, it is better to use a post office FD calculator so that you know the FD interest rates. One can use the freely available online FD calculator to know the applicable interest rates of post office FD.

All you need is to supply the tool with information such as the deposited amount, Post Office FD interest rate, and tenure of the FD to get accurate results.

Post Office FD Returns

Investment in INR Interest Rate (in %) Policy Tenure Returns (on Interest earned) Returns (on Maturity amount
50,000 6.7 3 years 10,738 60,738
1 Lakh 6.7 3 years 21,477 1,21,477
5 Lakhs 6.7 3 years 1,07,384 6,07,384
10 Lakhs 6.7 3 years 2,14,768 12,14,768

Process to Open Post Office FD

The Post Office Fixed Deposit account can be either opened online or via offline mode:

Online Mode

To open an FD account in a post office, one can use the net banking facility. Below are the steps:

  • Use your registered user id and password to log in to the e-banking platform of post office -ebanking.indiapost.gov.in
  • Go to ‘General Services’
  • Look for ‘Service Request’ and click on it
  • Request for opening an FD account by clicking on the ‘New Request’ tab
  • Now follow as directed to finish the process

Offline Mode

Below are the steps for opening a Fixed Deposit account offline:

  • Take all necessary documents and visit your nearest Post Office
  • Look for an official who could help you with the FD account opening
  • Enquire about the current interest rates for FD
  • Now, proceed as per the guidance of the concerned person
  • Make sure to take the receipt after the successful FD account opening

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FAQs on Post Office Fixed Deposit Interest Rates

What is the maximum interest rate offered on the FDs of the Post Office?

At present, the Post Office FDs provide a maximum interest rate of 6.70% interest for a tenure of five years.

Which is better - Post Office FD or Bank FD?

It actually depends on the needs and requirements of individuals. However, the Post Office FDs are regarded as Small Savings Scheme and they allow comparatively better rates and returns as compared to FDs of banks. 

Can I save in the Post Office FD? Are they safe?

Yes, Post Office FDs are safe as they are offered by government run post offices. Further, the Post Office FDs also come under the National Savings Scheme.

Which FD scheme (Bank or Post Office) gives the highest interest rate?

In most cases, the Post Office FD interest rate is high as compared to Bank FD interest. But it depends from bank to bank.

Do I get a loan against my Post Office FD?

Yes, the Post Office allows customers to get loans against their FD amount.

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Jan 23, 2023
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PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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