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Bank Deposits Versus Post Office Savings Research Team | Posted On Tuesday, March 03,2020, 04:00 PM

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Bank Deposits Versus Post Office Savings



Money matters are quite critical and sensitive and you want to make the best out of your money. Be it investing in commodities, equities or fixed income securities, each investor based on their risk profile makes these decisions.

The investment decision varies according to the investment horizon, the investment scheme benefits, cash flow requirements, lock-in period and so on. This investment decision needs to be made diligently as it affects the future as well as present income. Hence, being an informed investor, it is crucial to make this decision based on facts and figures.

The most common savings option that comes with fixed interest rates is bank fixed deposits and post office savings accounts. Depending on options available, you can make your choice.

Want to know more on Bank FDs? We at will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

Bank deposits versus post office savings

Here are the key differences between bank fixed deposits and post office savings scheme.





In case of bank fixed deposits, the rate of interest is pre-determined and the investors get a fixed sum assured on maturity.

The interest rate for bank FDs generally ranges between 6% to 7% for different banks.

In case of post office savings scheme, the rate of interest is pre-determined and the investors get a fixed sum assured on maturity.



Fixed deposits come with different lock-in periods.

Post office savings schemes come in variants like:

1.    Post office time deposit account

2.    Post office savings account

3.    Public Provident fund

4.    Five years post office recurring deposit account

5.    Post office monthly savings scheme

6.    Senior citizen savings scheme

7.    National saving certificate

8.    Sukanya Samriddhi Yojana Accounts

9.    Kisan Vikas Patra

These schemes come with various lock-in periods.


Bank fixed deposits are 100% risk free investments

Post office monthly income scheme is also a 100% risk free investment.


The fundamentals of investing in bank fixed deposits is to preserve hard earned money and earn decent interest.

The idea behind investing in post office savings schemes is wealth preservation with a comparatively higher rate of interest on the investment.

Premature or Partial withdrawal

Apart from the 5 year tax saving fixed deposit, all FDs can be prematurely withdrawn with a penalty.

All post office savings schemes can be prematurely withdrawn after completion of 1 year with a penalty.

Tax benefits

Bank FDs come in all variants. There are tax savings FDs as well as normal FDs without any tax benefits.



Post office savings schemes are tax efficient vis-a-vis bank FDs. There are schemes like PPF (Public Provident Fund) that falls under the EEE category and is completely tax free. Even the interest earned on it is tax exempt.

Customer experience

Customer service and experience is where banks have an upper hand over the post office. With net banking facilities, user experience goes to the next level. The privatization of banks has raised the bar as banks score over the post office.

The post office though offering better schemes and return rates; lags in infrastructure.

Customer experience is on the poorer side and there’s need for a focus on the online modes.

Investing in fixed return instruments has always been the first choice of most Indian investors who are conservative. With the expansion of this segment, there are several options available; depending on time horizon and financial goals.

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