SBI FD vs Post Office FD: Which offers better returns on Rs 1,00,000, Rs 3,00,000 lakh and Rs 5.00,000 investments over 5 years, see calculations

Fixed Deposits (FDs) remain one of the most popular investment choices for risk-averse investors. Whether through banks or post offices, FDs provide guaranteed returns, making them a preferred option over market-linked instruments like mutual funds or stocks. This article compares the FD interest rates offered by the State Bank of India (SBI) and the Post Office, with examples to help investors make an informed choice.

SBI Fixed Deposit (FD) Rates

SBI Fixed Deposits are well-known for their competitive interest rates and safety. Investors also benefit from tax deductions of up to Rs. 1.5 lakh under Section 80C when investing in a 5-year tax-saver FD. SBI FDs are ideal for those seeking a secure investment with predictable returns.

SBI FD Interest Rate: 6.5%
Examples:

• Invested Amount: Rs 1,00,000
  Estimated Return: Rs 38,042
  Total Value: Rs 1,38,042

• Invested Amount: Rs 3,00,000
  Estimated Return: Rs 1,14,126
  Total Value: Rs 4,14,126

• Invested Amount: Rs 5,00,000
  Estimated Return: ₹1,90,210
  Total Value: ₹6,90,210

Post Office Fixed Deposit (FD) Rates

Post Office Fixed Deposits (also known as Post Office Time Deposits) are backed by the Government of India, offering the highest level of safety. Like bank FDs, these deposits provide assured returns and are ideal for conservative investors. The longer the tenure, the higher the interest rate.

Post Office FD Interest Rate: 7.5%
Examples:

• Invested Amount: Rs 1,00,000
  Estimated Return: Rs 44,995
  Total Value: Rs 1,44,995

• Invested Amount: Rs 3,00,000
  Estimated Return: Rs 1,34,984
  Total Value: Rs 4,34,984

• Invested Amount: Rs 5,00,000
  Estimated Return: Rs 2,24,974
  Total Value: Rs 7,24,974

While both SBI and Post Office FDs offer safe and guaranteed returns, the choice between the two depends on the investor’s preference for interest rates and the institution's credibility. Post Office FDs currently offer a higher interest rate of 7.5% compared to SBI's 6.5%. However, SBI FDs come with added benefits like tax savings under Section 80C.