Post Office RD Vs Bank RD: With Interest Rate of 6.7% Should You Prefer Post Office Recurring Deposit?

A post office recurring deposit (RD) is a popular savings scheme and one of the most popular savings alternatives to fixed deposits backed by the Indian government. The scheme caters to mid-term savings where the depositors park their investment for a tenure of at least five years. Meanwhile, a Bank RD is a unique term deposit that is offered by Indian Banks. Most major banks offer Recurring Deposit Accounts in India, with a term that usually ranges between 6 months to 10 years. The minimum amount for deposits depends on one bank to another bank. An individual can invest in an amount as low as Rs. 1000.

While Banks provide you the option to book RDs for a period ranging from 6 months to 10 years, the post office does not offer that flexibility as you have the only option to make a 5-year deposit there. This suggests that your money has to stay invested for a longer duration in a post office RD.

When it comes to traditional investment practices, RDs have topped the list of options available to investors to build their wealth over time. However, for RDs, it is often seen that people are in a dilemma whether to go for Bank RD or post office RDs.

With the interest rate on post office RDs now raised to 6.7% for the October-December quarter, individuals looking for better returns and alternative sources of income can look out at the features of a recurring deposit at their nearest post office.

The post office RD is very similar to a systematic savings plan. You invest a certain sum every month for five years.

Returns From Post office RD Vs Returns from bank RD

A 5-year post office RD offers you an interest rate of 6.7% in the October-December quarter. Meanwhile, when it comes to banks, just a handful of well-known private-sector lenders offer higher interest rates.

Post-office RD

Interest Rate: 6.70%

HDFC Bank:

HDFC Bank and ICICI Bank offer an interest rate of 7% on RDs having a maturity period of five years.

ICICI Bank:

ICICI Bank offers an interest rate of 7% (for a tenure of Above 3 years up to 5 years).

Bank of Baroda:

For tenure of 3 Years and up to 5 Years, BoB offers an interest rate of 6.50% for the general public, for senior citizens the rate is 7.15%.

Yes Bank:

For a tenure of 60 months, Yes Bank offers an interest rate of 7.25% for the general public, for senior citizens the rate is 8%.

Kotak Mahindra Bank

For a tenure of 5 years -10 years, Kotak Mahindra Bank offers an interest rate of 6.20% for the general public, for senior citizens the rate is 6.70%.