Interest Rates on Recurring Deposits: Which is better, the bank or the post office?

 Interest Rates on Recurring Deposits: Which is better, the bank or the post office?

RD Interest Rates: While time is the primary distinction between post office and bank recurrent deposits, there is also a significant variation in interest rates. You can choose which choice is best for you right here.

RD Interest Rates: Indian households are very adept at setting aside little amounts of money each month in order to save for the future. Recurring Deposit (RD), a well-liked program offered by banks and post offices, supports these meager savings. The Post Office raised the interest rate on RD to 6.7 percent for the October–December quarter. In the bank or post office, you may find out which one offers higher interest rates and amenities, as well as where it would be best for you to put your money.

Recurring deposit: what is it?

RD is a kind of systematic savings plan in which you deposit money for a few years and save each month. After the RD's allotted time has passed, you get the money collected plus interest. Middle class families thus really enjoy this plan.

What differences exist between bank and post office RDs?

The time period is the primary distinction between RDs from banks and post offices. The post office only offers RD for a period of five years, while banks let you to pick a duration of six months to five years.

What makes the interest rates different?

The post office is just slightly behind a few commercial banks when it comes to RD interest rates. Post offices provide higher interest rates on RDs than from most banks. The only banks giving higher interest rates are Bank of Baroda (BOB), Axis Bank, Canara Bank, HDFC Bank, and ICICI Bank. The range of their interest rates is 6.75 percent to 7 percent.

RD account opening eligibility

In order to create an RD account, you need to be an Indian citizen. You and your guardian may establish this account together even if you are less than ten years old. It is also possible to create an RD account together.

How much cash can you begin investing with?

At the post office, you may establish this account with a minimum monthly balance of Rs 100. You may deposit any maximum quantity of money. There is no danger associated with this plan since the Government of India backs the RD account.

Banks provide several programs.

That being said, the bank's RD system differs from the post office's. You may begin with Rs 100 each month in this as well. It is important to remember, nevertheless, that your whole deposit plus interest must not exceed Rs 5 lakh. The Deposit Insurance Program covers only up to Rs 5 lakh in total.

How to take money out before the timer goes off

It is only possible to terminate an RD account at the post office after three years have passed. You will only get the interest on the savings account in this scenario, however. In addition, you have the option of taking out a loan on an RD account, with the option to pay back the loan in installments at an additional 2% interest rate. Most banks don't have lock-in periods, so taking money out early isn't too difficult. You could have to pay a fee, however.

revenue tax on RD

Tax advantages are not available for RD accounts. In addition, the interest you get at maturity is taxable, so you'll need to pay TDS.

Which is a better place to invest money—the post office or a bank?

Your RD account is secure at the post office as well as the bank. But the post office offers you more assurance that your money is secure than banks do. However, the banks prevail if we examine the straightforward guidelines for canceling the account. As a result, you may decide while considering your demands.