When it comes to investments, you should always plan ahead and conduct a thorough study before making a decision. This is because your decision will have an impact on various areas of your investment, including operational freedom, tenure, and interest rate, among others. We compare bank-offered FDs to the Post Office Savings Scheme to see which is the better option for investors looking at things from different perspectives.
Post Office FD or Bank FD?
Traditional fixed deposit investment vehicles supplied by banks are known as bank FDs. Any amount of money with no upper limit can be placed in a fixed deposit for a period of 12 to 60 months. Interest rates on FDs range between banks and for different types of investors, such as normal investors and senior citizens.
The Post Office Savings Scheme, often known as the Small Savings Scheme, is run by the Post Office. They are known for providing significantly higher interest rates and returns than bank deposits. The following factors compare the features of FDs with Post Office Savings Schemes.
Interest Rates of Post Office FD and Interest Rates of Bank FDs
Let us use Equitas Bank as an example to compare the interest rates of FDs and Post Offices. Fixed deposit interest rates in Equitas Bank are 6.14% on FDs; a five-year post office term deposit might pay you 7.4%. The Public Provident Fund has an interest rate of 7.8%. NSC pays 7.6% interest on deposits, whereas Sukanya Samriddhi and KVP pay 8.1% and 7.3%, respectively.
Senior Citizens Will Carry the Added Advantage
The majority of bank deposits do not offer any advantages to senior folks. The Senior Citizens Savings Scheme, on the other hand, offers an annual rate of 8.3%. Senior adults seeking monthly income will benefit from the monthly income scheme offered by Post Offices, which offers a 7.3% annual interest rate. When compared to post office savings schemes, monthly interest rates on bank deposits are significantly lower and so are not as beneficial.
What About the Taxes?
When compared to bank FDs, some post office plans are considered to be more tax efficient. For example, the earnings from a PPF account are tax-free. On the other hand, FD earnings are fully taxed. Bank FDs are eligible for tax benefits under Section 80C. Some post office savings plans, including the PPF, National Savings Certificate, and Sukanya Samriddhi, can provide similar tax benefits to investors. Post office savings programs are more valuable than bank FDs because they combine a higher interest rate with some appealing tax benefits.
What to Select When it Comes to Customer Service?
The banks substantially outnumber the post offices in this regard. When it comes to customer care, banks use the most cutting-edge technology available today. The post office may be a time-consuming and boring affair involving a lot of paperwork.
However, given the considerable returns you may expect from post office savings programs, you can disregard this disadvantage and opt for these better investment vehicles to get the most out of your hard-earned money.
In general, investments in an FD are a good idea.
What are the Perks of Choosing to Invest in an FD (Whether through a Post Office or a Bank)
Fixed Deposits are one of the greatest investment options for those seeking consistent earnings without exposing themselves to market risk. FDs pay a higher interest rate than savings accounts, but the advantages of keeping your money in an FD go beyond the high-interest rate. Many benefits come with FD investments, including insurance and healthcare, and in the case of FDs held for at least five years, the investor is also eligible for income tax exemption.
Experts say that FD investments are a good idea, especially in these turbulent times. Beyond the strong return on money, there are five advantages of FDs that make them a desirable investment option.
Overdraft Facility: Bank customers with FDs are eligible for an overdraft facility. Customers can use the service to satisfy unexpected monetary needs in the event of an emergency.
Tax Benefits: There are tax advantages to investing in FDs. Customers can claim tax exemption for investments made in FDs via tax saving plans under Section 80C of the Income Tax Act, 1961.
FDs offer a guaranteed return: With no danger to your investment, and unlike other investment options, the returns do not vary. Beginners can create an investment habit by investing in bank FDs with even smaller amounts for shorter periods of time, such as 15 days to 3 months.
Insurance and Healthcare: To entice clients to invest in FDs, several banks offer complimentary insurance plans and other health-related perks in addition to their investment schemes.
Ease of Managing FD Investments: With the advent of the internet, users were able to manage their banking more easily. They can now manage their finances using a phone or a laptop that is connected to the internet. Unlike in the past, opening an FD account and investing money does not involve a lengthy official process, and bank customers may make GD investments through online banking in a matter of minutes.
What you choose as your source of investment will only depend on your financial goal. So, choose an option that would align with your financial goal and give you the best perks. But, as already mentioned – investing in a fixed deposit through a bank or a post office is a good idea.