All About Post Office Time Deposit Scheme

Because of the security and high interest rates, Indian citizens prefer Post Office savings schemes. Many individuals are flocking to mutual funds, SIPs, and equity markets these days, but Post Office (PO) schemes continue to be used by a vast number of people, mainly in rural India. Because of the availability of small-scale savings with good interest rate possibilities, the Post Office National Savings Time Deposit (TD) Scheme is one of the most popular fixed programmes. Some other savings bank accounts offer better returns than the TD account. Another reason to pick the Post Office Time Deposit (TD) Scheme is that, unlike the Kisan Vikas Patra (KVP) or National Savings Certificates (NSC) by PO, you can withdraw your money from the scheme after 6 months if you need money right away.

Interest rates of POTD account :

Tenure Interest rate

1 year A/c 5.50%

2 years A/c 5.50%

3 years A/c 5.50%

5 years A/c 6.70%

Information source: indiapost.gov.in

The scheme's interest will be paid annually, although it will be computed quarterly, and the interest amount will be credited to your TD account if you request it. Section 80C of the Income Tax Act of 1961 will apply to investments made under 5 years TD. The deposit will be repaid when 1 year, 2 years, 3 years, and 5 years have passed. On maturity, however, depositors might prolong their TD account for another term beyond that for which it was originally started. Your TD account can be moved from one PO branch to another.

Rule of withdrawal:

No deposit may be withdrawn before the six-month period has passed since the date of deposit. The PO Savings Account Interest rate will apply if the TD account is cancelled after 6 months but before 1 year. If a TD account is prematurely terminated after two, three, or five years, interest will be calculated at 2% less than the TD interest rate for the completed years, and PO Savings Interest rates will apply for any part of less than a year.

Rule for starting an account:

The minimum amount required to open a TD account is Rs. 1000 in multiples of Rs. 100, with no maximum investment restriction. One can open a one-year, two-year, three-year, or five-year account. Anyone over the age of 18 can register a TD account as a nominee, however a parent can open an account on behalf of a kid over the age of ten. A joint account can be formed in the names of two or three people, with the nominee. If the investor is a senior citizen, though, he or she can participate in the Senior Citizen Savings Scheme, which pays 7.4 percent interest.

For comparison with SBI interest rates:

The interest rate on SBI's Fixed Deposit (FD) scheme is 5.30 percent for 3 to less than 5 years, and 5.40 percent for 5 to less than 10 years (source: sbi.co.in/web/personal-banking/investments-deposits/deposits/fixed-deposit). It's also worth noting that the current interest rate on SBI SB Deposit accounts (as of May 31, 2020) is 2.70 percent per annum (source: sbi.co.in/web/interest-rates/savings-bank-deposits). As a result, the Post Office National Savings Time Deposit (TD) Scheme is a popular choice among ordinary Indians.