SBI FD vs post office time deposit: A comparative study

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Fixed deposits (FDs) are one of the most popular investment avenues for those looking for safe and assured returns on their investments. Amid the Covid-19 pandemic, almost all of the country’s major banks, revised interest rates on its FDs. Even small finance banks, which generally offer higher interest rates than private and public commercial banks, have also lowered their interest rates on fixed deposits. Just like banks, post offices also offer fixed deposit facilities for the general public. One can start an FD deposit in post offices too. Post office time deposit interest rates come up for quarterly revision.

With more than 49 crore customers — a number that is more than the combined population of the US, England and Germany — SBI is the country’s biggest commercial bank. It is considered one of the safest banks in our country. On the other hand, all saving schemes in post office including time deposit are backed by central government. But in terms of interest rates on fixed deposits, one must compare State Bank of India with India Post before any final decision.

Post Office term deposit schemes

Post Office term deposit schemes are similar to bank FDs. One can open this account single or jointly with paying a minimum amount of Rs 1,000. There is no maximum limit. The tenure of post office term deposits ranges from one year to five years. The government has kept the interest rates unchanged for the third quarter of 2021-22.

At present it offers a minimum 5.5% and maximum 6.7% interest rates on time deposits for different tenure.  Interest is payable annually but calculated quarterly.

Take a look at the tenure-wise interest rates:

One year; two years and three years: 5.5%

Five years: 6.7%

SBI FD interest rates

State Bank of India (SBI) offers interest rates between 2.90% to 5.30% on FDs for deposits below Rs 2 crore for tenure between seven days and less than five years to the general public. The rate is 5.40% for tenures between five years and up to 10 years. This rates are effective from January 1, 2021.

But senior citizens will earn 0.50% extra interest for tenure less than 5 years. And they will get additional interest of 30 basis points over and above the 50 basis points on deposit for tenure of 5 years and more.

Take a look on latest interest rates on FDs offers by SBI to general public:

07 days to 45 days: 2.90%

46 days to 179 days: 3.90%

180 days to 210 days, 211 days to less than 1 year: 4.40%

1 year to less than 2 year: 5.00%

2 years to less than 3 years: 5.10%

3 years to less than 5 years: 5.30%

5 years and up to 10 years: 5.40%