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Bank FD vs Post Office FD- a quick comparison

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Each investor has different needs and investment habits. With so many financial options available to us at the moment, selecting the ideal investing tool can be pretty frightening. Risk-taking investors choose assets like equities, mutual funds, and even cryptocurrencies to multiply their capital in a shorter period of time, whilst conservative investors go for assets with assured returns, such as fixed deposits and recurring deposits. Due to its risk-free nature and ability to guarantee returns that are higher than those offered by savings account interest, almost a larger portion of Indians continue to prefer to put their money in fixed deposit or term deposit schemes.

 

Similar to banks, India Post Services offers fixed deposit plans with terms ranging from one year to five years that provide investors with a fixed return that is guaranteed. The minimum investment for the FD scheme is Rs 1,000, and this sum applies to both regular investors and older citizens.Now a question arises which is better a Bank FD or Post office FD?
Let's do a quick comparison.

Comparison between Bank FDs vs Post Office FDs

  • The main benefit of Post Office FDs is that as they are government programmes and are connected to government securities, they are less sensitive to market swings than Bank FD rates, which depend on central bank rate revision and occasionally change depending on the state of the market.
 
Bank FD vs Post Office FD- a quick comparison
  • While post office schemes can be extended for up to five years, bank FDs have adjustable tenures ranging from seven days to ten years.
  • The interest rates offered by banks on fixed deposits (FDs) depends on the tenure and the amount chosen. Whereas Post Office term deposits interest rates vary when it comes to the tenure.
  • When you withdraw your bank FDbefore time, banks levy a fee to make up for it. The penalty often depends on when you withdraw the FD during the designated duration, in accordance with the terms and condition of the bank. Usually, the penalty charges range from 0.5 to 1% of the interest rate.Whereas in post office FD the interest is paid annually and placed into investors savings account. Similar to bank FDs, premature withdrawal from a Post Office Term Deposit is possible, but only in the first six to twelve months following the date the scheme was issued.

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