Bank FD Vs Post Office Term Deposit: Which Offers Higher Interest Rates?

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posted on 1 year ago — updated on 1 second ago

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Post offices are offering term deposit interest rates up to 7.5 per cent, based on the tenure of the deposits; bank FD is offering up to 7.75 per cent interest rates on FD, depending upon deposit tenure and depositor's age

The government recently retained interest rates on most small savings schemes, including post office deposits. Banks have also kept their interest rates unchanged for quite some time now even as the RBI has retained its repo rate for three times in a row. Here’s the comparison of bank FD rates and post office term deposit interest rates.

Post offices are offering term deposit interest rates up to 7.5 per cent, based on the tenure of the deposits. One-year post office time deposits currently stand at 6.9 per cent, 2-year post office time deposits at 7.0 per cent, 3-year post office time deposits at 7 per cent, and 5-year post office time deposits at 7.5 per cent.

On the other hand, HDFC Bank is offering up to 7.75 per cent interest rates on FD, depending upon deposit tenure and depositor’s age. SBI is offering FD rates up to 7.50 per cent annually, PNB is giving up to 7.75 per cent a year, and ICICI Bank is offering FD rates up to 7.60 per cent annually.

Tenure-wise bank FD rates can be checked here.

The interest rates may go up in future as RBI Governor Shaktikanta Das in its bimonthly monetary policy statement recently said the complete monetary policy transmission has not taken place yet in the current rate hike cycle, thus nudging lenders to raise interest rates.

Addressing the press conference after bi-monthly monetary policy earlier this month, RBI Governor Shaktikanta Das said, “The transmission of repo rate hikes is still incomplete. We have raised the repo rate by 250 basis points (in the current rate hike cycle) but it has not fully translated into either the deposit rates or the lending rates of the banks. There is still some distance to be covered. We would expect that to align with the repo rate.”

In an off-cycle meeting in May 2022, the MPC raised the policy rate by 40 basis points, and it was followed by rate hikes of varying sizes, in each of the five subsequent meetings till February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.