What Are The Fixed Deposit Schemes In Post Office?

Investment is a term most of us are familiar with. After all, it involves ensuring our hard earned money is not only safe, but also churns out good returns in the future.

However, with the ever growing options available today due to the growth of the Financial sector, it becomes increasingly important to do a thorough research before zeroing in on a scheme.

Let us study the different fixed deposit schemes in post office:

Post Office Savings Account

• Interest Rate in FD - 4% p.a on individual and joint accounts.
• Minimum amount required for account opening - Rs 20.

Key Features:

• Account to be opened by cash only.
• Minimum balance required to be maintained is Rs 50.
• Cheque facility available only if the account is opened with Rs 500 and a minimum balance of the same amount is maintained throughout.
• Cheque facility can be availed in an existing account as well.
• Interest earned upto Rs 10,000 p.a is tax free.
• Nomination facility available.
• Account is transferable from one Post office to another.
• Only one account per Post office allowed.
• Account can be opened in a minor’s name. On becoming a major, he/she can convert the account in their name.
• Two /three adults can open a joint account together.
• Minimum one transaction of either deposit or withdrawal once in three years to keep the account active.
• Joint account can be converted into a single account and vice versa.
• Withdrawals and deposits can be done in CBS post offices by any electronic mode. ATM facility can be availed.

5 Year Post Office Recurring Deposit Account (RD)

• Interest Rate in FD - 6.9% p.a.
• Minimum amount required for account opening - Rs 10 or any multiples of Rs 5 per month.

Key Features:

• Account can be opened by cash or cheque. For cheques, date of credit in Government account will be considered the deposit date.
• Nomination facility can be availed at the time of opening or after.
• Transferable account.
• Multiple accounts can be opened in one post office.
• Account can be opened in a minor’s name.
• Joint account to be opened by two adults.
• Successive deposit to be made upto 15th of next month if account was opened by 15th of a month and upto the last date of next month if account was opened after 15th. Failure to do so will provoke a penalty of Rs 0.05 per every Rs 5. After 4 defaults the account shall be deactivated. It should be revived within 2 months.
• Joint account can be converted into a single account and vice versa.
• Partial refund on advance deposit of 6 installments.
• 50% withdrawal allowed after one year.
• Full maturity value allowed in Rs 50 denomination in case of depositor’s death.

Post Office Time Deposit Account

• Interest Rate in FD - 6.6% p.a.for 1 year account, 6.7% for 2 years, 6.9% for 3 years & 7.4% for 5 years.
• Minimum amount required for account opening - Rs 200.

Key Features:

• Account to be opened by individual.
• Account can be opened by cash or cheque. For cheques, date of credit in Government account will be considered the deposit date.
• Nomination facility can be availed at the time of opening or after.
• Transferable account.
• Multiple accounts can be opened in one post office.
• Account can be opened in a minor’s name. On becoming a major, he/she can convert the account in their name.
• Joint account to be opened by two adults.
• Joint account can be converted into a single account and vice versa.
• When a TD matures, it is automatically renewed for the same period that it was initially opened for.
• Benefits of Sec 80C of Income Tax Act, 1961 (1.4.2007) is applicable for investments under 5 years.

Post Office Monthly Income Scheme Account (MIS)

• Interest Rate in FD - 7.3% p.a.
• Minimum amount required for account opening - Rs 1500 or its multiples.

Key Features:

• Account can be opened by cash or cheque. For cheques, date of credit in Government account will be considered the deposit date.
• Nomination facility can be availed at the time of opening or after.
• Transferable account.
• Multiple accounts can be opened in one post office, subject to max limits.
• Account can be opened in a minor’s name. On becoming a major, he/she can convert the account in their name.
• Joint account to be opened by two/three adults.
• 5 years maturity period.
• Interest may be drawn through PDCs, ECS or direct credit to savings account.
• Possible to encash prematurely after a year but before 3 years @ 2% deduction from deposit and 1% deduction after 3 years.
• 5% bonus on maturity on MIS accounts opened between 8.12.07 - 30.11.2011.

Interest Rates In FDs:

• Depending on an organisation’s business strategy, FD rates vary. Eg. FD interest rates in HDFC would vary from FD interest rates in SBI.
• FD interest rates is calculated based on the liquid cash a bank has at any point of time.
• Interest rate in FD tend to vary daily for deposits of high value.
• If Interest rate in FD is more than Rs 10,000 p.a, it is subject to TDS.

Senior citizens get a higher Interest rate in FD.