Post Office Fixed Deposit or Post Office Recurring Deposit? Which one is the better investment option for you
Are you one of those who keeps planning to save money by means of various options but unable to find out which scheme is the best suited for you?
The Department of Posts or India Post gives both fixed deposits and recurring deposits and terms. (PTI)
Are you one of those who keeps planning to save money by means of various options but unable to find out which scheme is the best suited for you? The best way to get wealth is to start investing in good options. Investment amount can be little but investing for long-term can be the key to better returns. For individuals who are skeptic about investing in the share market, fixed income options such as recurring deposits (RDs) and fixed deposits (FDs) might be the right step ahead.
The Department of Posts or India Post gives both fixed deposits and recurring deposits and terms. According to its official website indiapost.gov.in, India Post offers nine saving schemes which include FDs and RDs.
Here are the key features, interest rates and the maximum/minimum amount required for a post office fixed deposit or recurring deposit:
Post Office Recurring Deposit Account (RD) features:-
5-Year Post Office Recurring Deposit Account (RD):
1- An RD account can be opened by cheque or cash.
2- The RD account is transferable and can be transferred from one post office to another.
3- Any number of RD accounts can be in any post office.
4- A RD account can be opened in the name of a minor. The subscriber should be 10-year-old or above to open and operate the account.
5- RD account can also be opened jointly by two adults.
If the account is opened on or before 15th of a month then the subsequent deposit can be made up to 15th of next month. Meanwhile, if the account has been opened between 16th and last working day of the month then the deposit can be made up to last working date of next month.
If the deposit is not made before the last date then a default fee is charged for each default. Default fee at Rs 0.05 for every Rs 5 will be charged. Notably, the account will be discontinued after four regular defaults and can be revived in two months.
Interestingly, there is a refund of advance deposit of at least six installments. A single RD account can be converted into joint and vice-versa. A subscriber can withdraw up to 50 percent of the balance after one year of the opening of the account.
Interest rate:
Starting January 1, 2018, interest rate is 6.9 percent per annum (quarterly compounded). On maturity, Rs. 10 account fetches Rs. 717.43. The RD account can be continued for another five years on a year-to-year basis.
Minimum Amount for the opening of post office recurring deposit account:
The minimum amount of Rs 10 per month and above in multiple of Rs 5 is required to open an RD. There is no maximum limit for RD.
Post Office Time Deposit (TD) Account or Fixed Deposit (FD) Account:
The features of FD accounts are similar to that of RD accounts. However, it is the interest rate and the minimum amount that differs.
Interest rates:
Interest rates from January 1, 2018, for Post office FD accounts, are:
Period Rate:
| Period | Rate |
| 1-year A/c | 6.6% |
| 2-year A/c | 6.7% |
| 3-year A/c | 6.9% |
| 5-year A/c | 7.4% |
Minimum amount required for the opening of post office FD account:
Subscribers need to deposit a minimum of Rs 200 to open an account. However, there is no maximum balance that can be retained.