After the RBI Repo Rate cut, the Post Office Scheme gives amazing interest, know the details
Post Office FD Scheme: The Reserve Bank of India (RBI) has cut the repo rate by 1.25 percent this year. Following this, banks across the country have also been competing to lower interest rates on their fixed deposits (FDs). It’s a common practice that when the RBI reduces the repo rate, banks lower their interest rates on FDs, and when the RBI increases the repo rate, banks also increase their interest rates on FDs.
However, the repo rate does not affect Post Office FDs because their interest rates are directly determined by the government and are updated every three months. Therefore, Post Office FDs can still be considered a smart choice for safe investment and guaranteed returns.
Interest on Post Office TD Scheme: Currently, the Post Office TD scheme offers interest rates ranging from 6.9 to 7.5 percent, which is higher than the FD rates offered by many banks. The Post Office TD scheme works just like a bank FD, where you invest a lump sum for a fixed period, and at maturity, you receive the principal amount along with interest. This is why many investors also refer to it as a ‘Post Office FD’. The Post Office TD scheme offers 6.9 percent interest for a one-year investment, 7.0 percent for a two-year investment, 7.1 percent for a three-year investment, and 7.5 percent for a five-year investment.
Nearly ₹90,000 in Interest Alone: If you invest ₹2,00,000 in the Post Office TD scheme for 5 years at an interest rate of 7.5 percent, with compounding growth, you will receive a guaranteed interest of ₹89,990 at maturity, bringing the total amount to ₹2,89,990. Currently, very few banks offer an interest rate of 7.5 percent on FDs. Most banks’ interest rates are currently between 6.5 and 7 percent. Therefore, the Post Office option is clearly more beneficial for you. Another advantage is that the 5-year Post Office TD scheme is eligible for tax benefits under Section 80C of the Income Tax Act, which is not available with short-term bank FDs.
