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Post Office RD Vs Bank RD, Which is Better?

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Recurring deposits are ideal for investors who prefer low-risk investments, as well as first-time investors who are depositing funds into a scheme for the first time.Thinking of opening a RD account, but confused, what's better? A post office RD or a bank Rd. Here is the comparison between Post office RD and Bank RD.

 

What is Post Office RD?

The post office offers nine government-backed savings schemes, including the Post Office Savings Scheme. The Post Office's recurring deposit is designed as a mid-term savings plan. Depositors will be required to keep their investments in this scheme for a minimum of five years.

Features-

  • The Post Office RD is a monthly fixed investment for a period of 5 years
  • Post Office Account RD assists small investors by allowing them to invest as little as Rs.100 per month and in multiples of Rs.10. There is no maximum investment amount.
  • Two adult individuals can also open joint accounts. A minor's name can also be used to open an account. Multiple accounts can be created.
  • If you fail to make a monthly investment, you will be charged a default fee of 1 rupee for every 100 rupees.
  • After a year, the account allows for a partial withdrawal of up to 50% of the balance.
 

Post Office RD Vs Bank RD, Which is Better?

What is bank RD?

A Recurring Deposit, abbreviated as RD, is a unique term-deposit offered by Indian banks. It is an investment tool that allows people to make regular deposits and earn reasonable returns. Because of the regular deposit factor and an interest component, it frequently provides users/individuals with flexibility and ease of investment.

Features-

  • Transferring RD from one bank to another is possible.
  • The minimum deposit period is six months, and the maximum deposit period is ten years.
  • The interest rate is the same as that offered on a Fixed Deposit and thus higher than any other Savings scheme.
  • RD also provides the option of taking out a loan against the deposit, i.e., using the deposit as collateral. A loan of 80 to 90% of the deposit value can be made to the account holder. It differs depending on the lender.

Comparison between Post office RD Vs Bank RD?

  • The tenure of an RD account is set at 5 years in the post office whereas In banks there are multiple tenure options ranging from 1 year to ten years.
  • The interest rates on post office RDs are revised every quarter, but banks do not revise their RD rates at regular intervals.
  • In banks, you can renew the RD for as long as you want, but in the post office, the tenure must be 5 years.
  • In case of premature withdrawal, 50% of the balance in a post office RD can be withdrawn. This advance can be repaid in full, plus interest at the prescribed rate, at any time during the account's term wheres In bank RD, a loan or overdraft facility of up to 95% of the recurring deposit amount is available.

Read more about: post office banks
Story first published: Friday, November 4, 2022, 21:57 [IST]
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