Know your fixed deposit rate! Does post office give a better return than SBI, other banks?

Fixed deposit (FD) is the preferred mode of investment for millions of people in India, especially those belonging to middle-income groups. A fixed deposit, which is offered by banks and other financial institutions, allows you to deposit a certain amount of money for a fixed period of time at a predetermined interest rate. Fixed deposit schemes are popular as a financial instrument as they offer guaranteed returns as per the agreed interest rate and provide higher interest rates than regular savings accounts.

Depositors can also choose the duration or tenure of the fixed deposit, which can range from a few months to several years, depending on their financial goals.

While the returns on other investment options are subject to market risks FDs come as a secure financial instrument. FDs have become a popular mode of investment for middle-income groups who are guided by a low-risk appetite and prefer security over windfall gains.

It is worth noting that several private banks have increased their fixed deposit interest rates depending on Reserve Bank of India’s repo rate revisions.

RBI has hiked the repo rate by 250 bps since May 2022. This has resulted in attractive FD interest rates for depositors.

Apart from banks, depositors can consider Post Office Time Deposits (POTDs) or Post Office Fixed Deposits too. While Post office fixed deposits were earlier fetching lesser returns than bank FDs, they have become competitive with the government implementing three consecutive increases in interest rates on small savings schemes recently.

Here's a comparison of the interest rates of Post Office Fixed Deposits with bank FDs of some prominent private banks.

Post Office Fixed Deposits

The government has increased the interest rates of post office term deposits for the second quarter of 2023. While the rate on Post Office Fixed Deposit of two years under the small savings schemes is 6.9 percent, the rate on a three year FD has been increased to 7 percent from 5.5 percent.

1 year -6.8%

2 year-6.9%

3 year- 7%

5 year- 7.5%

State Bank of India

A fixed deposit of State Bank of India (SBI) of the duration from 7 days to 10 years will give a return of 3 percent to 7.1 percent to general customers. At the same time, senior citizens can avail 0.5 percent extra on these fixed deposits.

7 days to 45 days - 3%

46 days to 179 days - 4.5%

180 days to 210 days - 5.25%

211 days to less than 1 year - 5.75%

1 year to less than 2 years - 6.8%

400 Days (AMRIT KALASH)-7.1%

2 years to less than 3 years - 7%

3 years to less than 5 years - 6.5%

5 years and up to 10 years - 6.5%

HDFC Bank

HDFC Bank, the largest private sector lender in India, offers an interest rate ranging from 3 percent to 7.1 percent per annum for a tenure anywhere between 7 days to 10 years. 

At the same time, senior citizens can avail an additional rate of interest of 0.5 percent per annum for tenures of 7 days to 5 years.

ICICI Bank

The fixed deposit of ICICI Bank can fetch you interest rates ranging between 3 percent and 7.1 percent per annum.

Senior citizens can enjoy higher interest rates ranging between 3.5 percent and 7.6 percent.