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SBI FD Vs Post Office FD: Which Can Be A Good Bet For Conservative Investors?


Fixed deposits (FDs) are the ideal investment option for those seeking a secure and predictable return against their deposit. In India, fixed deposits are the most common investment alternative because they are considered secure, offer assured returns for a fixed period of time along with tax benefits. You can get guaranteed returns regardless of how interest rates change or how the economy stands at the time of investment. The rate of interest offered is determined by the FD's tenure or maturity period. Unlike equity-linked securities, which can lose money due to market fluctuations, fixed deposits offer a guaranteed rate of return. In FDs, the capital is secure, and the returns are better than that of savings accounts. When it comes to opening a fixed deposit account investors first prefer the top leading banks of India such as SBI or post office. Fixed deposit of both SBI and post office comes with a range of benefits and assured returns too which are not well-known for most of the investors till now. Hence, to choose the best here we have differentiated SBI FD and Post Office Time Deposit in terms of returns, benefits, tax deductions and so on.

SBI Fixed Deposit For Regular Citizens

SBI Fixed Deposit For Regular Citizens

SBI FDs with a maturity period of 7 to 45 days will yield 2.9 per cent. Term deposits with a maturity period of 46 to 179 days will yield 3.9 per cent. FDs with maturity ranging from 180 days to less than one year will yield 4.4 per cent. Deposits with a maturity period of one year or less than two years will now offer 10 basis points more. The interest rate on these deposits will be 5% instead of 4.9 per cent. FDs maturing in two to three years will yield 5.1 per cent. FDs with a maturity period of three to five years will offer 5.3 per cent, while term deposits maturing in five to ten years will offer 5.4 per cent. These rates are in effect from January 2021. Below are the SBI FD rates for the general public for a deposit amount of less than Rs 2 Cr.

TenureRate of interest
7 days - 45 days2.90%
46 days - 179 days3.90%
180 days - 210 days4.40%
211 days - 364 days4.40%
1 year - 1 year 364 days4.90%
2 years - 2 years 364 days5.10%
3 years - 4 years 364 days5.30%
5 years - 10 years5.40%
SBI Fixed Deposit For Senior Citizens

SBI Fixed Deposit For Senior Citizens

The State Bank of India (SBI), India's largest lender, has recently extended its SBI WeCare FD for senior citizens for the third time, until June 30. During the coronavirus pandemic, SBI FD for senior citizens was introduced to offer a higher interest rate to senior citizens. In the Retail TD category, a special SBI Wecare Deposit for Senior Citizens was introduced, in which an additional premium of 30 basis points (over and above the current 50 basis points) will be provided to Senior Citizens on their retail TD for tenors of '5 Years and Over' only. The interest rate on SBI's special FD scheme for senior citizens will be 80 basis points (bps) higher than the general public rate. SBI currently offers a 5.4 per cent interest rate on five-year fixed deposits to the general public. The interest rate applied to a fixed deposit made by a senior citizen under the special FD scheme is now 6.20 per cent respectively.

TenureRate of interest
7 days - 45 days3.40%
46 days - 179 days4.40%
180 days - 210 days4.90%
211 days - 364 days4.90%
1 year - 1 year 364 days5.40%
2 years - 2 years 364 days5.60%
3 years - 4 years 364 days5.80%
5 years - 10 years6.20%
Post Office Time Deposit

Post Office Time Deposit

The post office time deposit scheme is identical to those offered by banks. Term deposits are available at post offices for one to five years. On April 1, 2021, the interest rate on Post Office deposits was modified. The Government of India has withdrawn the previously declared lower rate of interest on Small Savings Schemes, and the rate of interest on these will now remain unchanged, and it will provide the same interest rate as it was in the last quarter of 2020-2021. As a result, it gives a 5.5 per cent interest rate on a one-year or three-year time deposit. The Post Office provides a 6.7 per cent interest rate for a five-year time deposit account.   

Why Small Saving Schemes Is Important For Your Personal Finance?Why Small Saving Schemes Is Important For Your Personal Finance?

Key benefits of post office time deposit

Key benefits of post office time deposit

The major advantages of the post office time deposit scheme are listed below:

  • Deposits in post office time deposit schemes can be made for one, two, three, or five years, with only one deposit allowed per account.
  • Transferring time deposit accounts from one post office to another can be done.
  • Time deposit accounts can be opened and managed individually or jointly.
  • When a time deposit account matures, account holders have the option of extending its term.
  • One can open a post office fixed deposit account by depositing a minimum amount of Rs 1000 and in multiple of Rs 100 with no upper limit.
  • This account can be opened and managed by a minor who is 10 years old or older. A parent or guardian can also open a Post Office Time Deposit account for a minor.
  • As it is backed by the government of India, it provides guaranteed returns.
  • Section 80C of the Income Tax Act allows for a tax exemption on 5-year time deposits.
  • Since the principal amount invested and the interest received are covered by a sovereign guarantee, POTD is considered better than FDs.
Post Office Time Deposit Interest Rates

Post Office Time Deposit Interest Rates

The below are the post office time deposit account interest rates for the period of April 1, 2021, to June 30, 2021.

1 Year5.50%
2 Years5.50%
3 Years5.50%
5 Years6.70%


The SBI Tax Saving Fixed Deposit Scheme enables deposits to gain a reasonable interest rate on lump-sum deposits up to Rs.1.5 lakh and also provide tax deductions of up to Rs.1.5 lakh under section 80C of the Income Tax Act. On their fixed deposit, senior citizens will earn an extra 0.50 per cent interest. Because of the tax incentives, there is a 5-year lock-in period. For a lock-in period of 5-year, the general public can earn an interest rate of 5.4% whereas senior citizens can earn an interest rate of 6.2% on tax-saving FD of SBI. This scheme allows you to deposit a minimum of Rs.1,000 and a limit of Rs.1.5 lakh. Income tax benefits, on the other hand, are only valid on a 5-year post office time deposit account. Depositors will be entitled to claim up to Rs.1.5 lakh of income tax deduction under Section 80C of the Income Tax Act, 1961.

Our take

Since the features of a Time Deposit Scheme are ideal for short-term investment and come with the assurance of assured returns which makes it a good bet for conservative investors. Investors seeking an option to bank fixed deposits should consider investing in Post Office Time Deposit Schemes, which pay better interest rates than fixed deposits for both the general public and senior citizens. You can also opt to invest in these schemes if you are an ultra-conservative investor with a low-risk appetite and a need for guaranteed returns. SBI Fixed Deposits, on the other hand, provide the highest level of security as well as consistent returns. SBI FD is perfect for you if you want complete security for your investments as well as a low but assured interest income. If you're trying to save up a certain amount for potential use or just want to optimize your returns, go with the cumulative interest payment option. If you're looking for a regular stream of interest, the non-cumulative alternative is the better bet. If you're 60 years old or older, we recommend investing in a Post Office Time Deposit or a Senior Citizen Savings Scheme rather than the SBI 'WeCare' scheme, which is a special senior citizen FD with a 5-year term. You will, without a doubt, get a 0.80 per cent higher rate of interest than the regular rate under this deposit scheme. However, the interest rate on a post office time deposit is 6.7 per cent for a 5-year term, which is slightly higher than the rate on SBI's special FD scheme, which is just 6.2 per cent until June.


Read more about: fd sbi small saving schemes
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