With 6.7% interest rate, will post office recurring deposit offer higher return than bank RD?
With the interest rate on post office RDs being increased to 6.7% for the October-December quarter, it may be worth your time to check out the features of a recurring deposit at your nearest post office.
The post office RD is very similar to a systematic savings plan. You invest a certain sum every month for five years.
Banks usually give you the option to book RDs for tenures ranging from 6 months to 5 years. But the post office does not give you that flexibility as it only has the option to make a 5-year deposit. This means your money has to stay invested for a longer period in a post office RD.
Post office RD interest rate versus bank RD interest rates
A five-year post office RD has an interest rate of 6.7% in the October-December quarter. Only a handful of well-known private sector banks offer higher interest rates.
HDFC Bank and ICICI Bank offer an interest rate of 7% on RDs maturing in five years. ICICI Bank offers an interest rate of 6.9%. Canara Bank offers 6.75% and Bank of Baroda 6.75%. State Bank of India (SBI) and YES Bank offer 6.5% and Punjab National Bank 5.3% on a five-year RD.
Post office RD versus bank RD: Interest rates compared
NameInterest rate (Oct-Dec quarter)
Post-office RD
6.70%
Bank
5-year RD interest rates
HDFC Bank
7.00%
Axis Bank
7.00%
ICICI Bank
6.90%
Canara Bank
6.80%
Bank of Baroda
6.75%
Yes Bank
6.50%
SBI
6.50%
Indian Overseas Bank
6.50%
DBS Bank
6.50%
IndusInd Bank
6.00%
South Indian Bank
5.65%
Union Bank of India
5.60%
Bandhan Bank
5.60%
Karur Vysya Bank
5.35%
Punjab National Bank
5.30%
IDBI Bank
5.25%
City Union Bank
5.25%
Bank of Maharashtra
5.25%
Bank of India
5.25%
Citibank
3.00%
Kotak Mahindra Bank
5.20%
Source: BankBazaar.com
Interest on recurring deposits is compounded
