A ray of good news have knocked the doors of general public who are looking to invest money in government’s small saving schemes like post office time deposits. With the beginning of 2019 year, the Finance Ministry gave gifts to citizens by hiking 1-year time deposit interest rates by about 10 basis points on quarterly basis. What is interestingly to see is that, now government’s this scheme has become even more attractive for customers, as interest earned on deposits would not be higher for them. However, one should make note on what other banks are also offering, in order to avail best benefits.

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The Ministry of Finance on December 31 said, “On the basis of the decision of the Government, interest rates for small savings schemes are to be notified on quarterly basis. Accordingly, the rates of interest on various small savings schemes for the fourth quarter of financial year 2018-19  starting 1st January 2019, and ending on 31st March 2019, on the basis of the interest compounding/payment built-in the schemes.”

Following which, from January 01,  the interest rate for 1-year time deposit stands at 7% higher by 10 basis points from 6.9% on quarterly basis.

Furthermore, the 2 year time deposit rates stand unchanged at 7%, however, the 3-year time deposit rates have been brought down from 7.2% to 7% on quarterly basis.

Meanwhile, the 5-year time deposits rate also saw status quo at 7.8% on quarterly.

Now that, government’s 1-time deposits look very compelling for an investor, it is always advisable to compare them with other major banks. Every hard-earned money invested wisely pays off very well in future. Thereby, let’s find out who offers best deposit rates.

Just like every other fixed deposits, government’s time deposit scheme also assures guaranteed returns on account holder’s investment. Not only this, this time deposits can also be transferred easily from one post office to another depending upon the requirement of an individual.

To begin an investment in government’s time deposit, all a customer need is minimum Rs 200 with no maximum limit. Whereas on the other hand, fixed deposits scheme in other banks require at least Rs 1000.

Furthermore, a customer can extend their time deposit account upon maturity. This investment scheme can either be sole or jointly held.

One of the major benefits provided by time deposits is that, if a customer does not withdraw their proceeds on maturity, then the account is automatically renewed once again for original deposit tenure on the interest rates which are applicable during maturity.

Also, a customer can deposit on numerous time as there are no caps levied. Even a minor aged of 10 years can open a time deposit account. Any guardian or parents can open this account for the minor. Also a nomination facility is applicable.

Adding more money in your kitty, this time deposit also allows tax deduction under section 80C of Income Tax Act.

Coming on interest earned! One of the key features is that you earn interest on compounding basis. Simply put you earn interest on interest. Interest earned is Tax Free up to Rs 10,000 per year.

From the above, it can be said that government’s time deposit is just like every other FDs offered by major lenders like HDFC Bank, SBI and ICICI Bank.

But what are the interest rates offered by other banks? Is it better than government one? Let’s find out!

HDFC Bank!

In its domestic/NRO/NRE term deposits, HDFC Bank for FDs below Rs 1 crore, now offers 7.30% interest rate to general public for 1 years tenure.

Over 2 years tenure but less than 3 years, HDFC Bank gives 7.40% interest rate to general public.

However, the interest on FD now is at 7.25% for customers whose tenure is between 3 years to 5 years on below Rs 1 crore deposits.  

SBI!

A regular citizen can make deposits at SBI and earn 6.80% interest per annum. Earlier, this tenure had interest rate of 6.70%.

Another tenure 2 years to less than 3 years, where a customer will also earn interest of 6.80% from SBI on their FDs. The interest on this tenure was 6.75%.

Similarly, SBI offers 6.85% interest rate on FDs made for 3 years to less than 5 years tenure, however on the other hand, the bank gives 6.85% rates on deposits made for 5 years to 10 years tenure. 

ICICI Bank!

This private lender offers 6.75% and 6.90% interest rate on Fixed Deposits made for 290 days to less than 1 year and 1 year to 389 days tenure.

ICICI offers a peak interest rate of 7.50% on term-deposits with a maturity of above 2 years upto 3 years.

Apart from this, for 3 years to 5 years tenure ICICI Bank gives 7.25%, whereas for 5 years to 10 years tenure - the bank offers 7% interest rates on FDs.

From the above it can be said that private lenders offer better FD interest rates compared to the government ones and state-owned banks. The only difference between government's 1-time deposit rates and overall banks FD rates is that, the formers give benefit on quarterly basis and the latter give on annually. In this case, surely govermment's small saving schemes has brought in bundle of good news to customers this year.