Post Office small savings schemes vs other bank fixed deposits: Where can you get higher interest?

A number of small savings schemes offered by Post Office offer higher returns than the Fixed Deposit or Time Deposit accounts offered by leading private and public sector banks. You can make deposits in Post Office small savings schemes like Senior Citizens Savings Scheme Account, Public Provident Fund Account, National Savings Certificates (VIII Issue) Account, Kisan Vikas Patra Account Sukanya Samriddhi AccountNational Savings Time Deposit Account, National Savings Recurring Deposit Account.

Even as several banks have hiked their respective interest rates in recent months, some of the schemes offered by the Post Office still offer higher returns. For example, Post Office Time Deposit offers an interest of 7.8% on a five-year account and 7% on three-year, two-year and 1-year accounts. 

The Post Office 5-Year Recurring Deposit Account (RD) offers 7.3% interest per annum, which is compounded annually. In Post National Savings Monthly Income Account, you can get 7.3% per annum. This interest is payable monthly. On National Savings Certificates, you can get 8% interest, which is compounded annually but paid only at maturity. Similarly, on Post Office Kisan Vikas Patra, you can get a 7.7% interest which is compounded annually. The invested amount in this account gets doubled in 112 months at the current rate of interest. 

The interest rates offered on Post Office Public Provident Fund (PPF) account and Sukanya Samirddhi Yojana (SSY) account ar 8% and 8.5% respectively. However, these two savings schemes are offered by several other schemes as well. 

What banks pay

Compared to the several savings schemes offered by the Post Office, the interest offered on fixed deposit accounts of leading banks is low at present. However, interest on PPF, SSY schemes offered by banks are the same as their interest rates are directly decided by the government. 

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Currently, the highest interest rate offered by SBI is 6.85% on a deposit of 5-10 years. The highest rate offered by HDFC Bank is 7.40% on a deposit of 2-3 years. Similarly, the highest rate offered by Axis Bank is 7,50% on a deposit of 2-3 years, while the highest rate offered by PNB is 7.10% on a deposit of 333 days.