Post Office Fixed Deposits in 2021 – Interest Rates and Features
Post office Fixed deposits are considered as one of the safest investment options as they are backed up by the Govt of India. Ministry of finance has reduced post office FD rates in the last few quarters. FD interest rates for Apr-2020 to Jun-2020 quarter is reduced further. Luckily GOI has retained the interest rates from Jul-20 onwards. In this article, we would provide Post Office Fixed Deposit Scheme details, features and interest rates which are applicable now in 2021.
Also Read: New Post Office Interest Rates in 2021
Features of Post Office Fixed Deposits (FDs)
Key features of the Post office FD are given below:
1) Post Office Fixed deposits are available for 1 year, 2 years, 3 years and 5 year tenure.
2) Interest rates on these Post Office FDs would vary based on the tenure. Interest rates are ranging between 5.5% to 6.7%, depending on the tenure of the FD.
3) Post office 5 years Tax Saving FD is generally invested for tax saving purpose. Interest rates on this FDs as of now is 6.7% per annum.
4) You can open Post Office FD for as low as Rs 100. There is no maximum amount in Post office FD.
5) Post office fixed deposit is also known as the National Savings Time Deposit Account
6) Nomination facility available.
7) You can transfer Post office FD from one post office to another.
8) You can open any number of post office FDs
9) Post office Time Deposit interest is paid annually and credited to your savings account. If you do not withdraw such interest amount from SB account, no FD interest would be paid. You would get just SB interest rate which is 4% per annum.
10) You can open Post office TD online provided you have a SB account and internet banking / mobile banking is activated.
Post Office Fixed Deposit Interest Rates in 2021
Here are the interest rates applicable for 1 to 5 year FD tenure. These interest rates are applicable now in 2021. Ministry of finance would announce post office FD rate of interest every quarter that are applicable for that quarter only.
1) Interest rate for 1 year – 5.5%
2) Interest rate for 2 years – 5.5%
3) Interest rate for 3 years – 5.5%
4) Interest rate for 5 years – 6.7%
Please note that though interest is paid annually, it is actually compounded quarterly. Hence you would get higher interest rates on these fixed deposits if you compute annually.
FAQs about Post Office Fixed Deposits / Time Deposits
1) How to open Post office FD scheme?
You need to approach post office and fill the deposit slip along with cash or cheque to open FD scheme. You even need to have SB account so that FD interest is credited to SB account every year.
2) Can I open Post office Fixed Deposit Online?
Yes. However, you need to have SB account and internet banking or mobile banking to that effect. You can login to internet banking / Mobile banking and open Post office Time Deposit (TD) online.
3) Can I close Post Office FD before maturity?
Post office offers premature withdrawal of your fixed deposits. However the FD should be active for a minimum for 6 months. After that you can always withdraw. For withdrawals between 6 months to 1 year, the investor would get only savings account interest rate. For all withdrawals beyond 1 year, an exit penalty of 1% is charged.
4) What is the minimum and maximum amount to invest in Post office FD?
You can invest a minimum of Rs 100 in post office fixed deposit scheme. There is no maximum limit.
5) Can I avail income tax exemptions on Post office Fixed Deposits?
Post office FDs are offered for 1 to 5 years tenure. You can get income tax exemptions only on Post office Tax Saving FD of 5 years. FDs of other tenure are not eligible for income tax exemptions.
6) Is it safe to invest in Post office FD schemes?
Post office saving schemes are safe to invest as these small saving schemes are offered and backed up by Govt of India.
7) What are post office FD rates for Senior Citizens?
SCSS in Post office is specifically for Senior Citizens where they get higher interest rates. Current interest rates on SCSS is 7.4% per annum.
8) How would post office FD calculator work?
The post office FD calculator would help you to calculate the maturity amount you would get based on the investment amount and tenure of the post office FD.
9) Why Post office FD rate of interest would change every quarter?
Till a couple of years, Ministry of finance used to announce Post office FD rate of interest once in a year. The interest rates on small savings schemes are reviewed and announced every quarter by the government of India now. The formula to arrive at the interest rates of the small savings schemes was given by the Shyamala Gopinath Committee. The committee had suggested that the interest rates of these schemes should be 25-100 bps higher than the yields of the government bonds of similar maturity.
10) Can I transfer my Post Office FD account from one Post office branch to another?
You might think that it is cumbersome to visit post office each time. If you have changed your address this would be even more painful. If you have Post office Fixed deposits and you have moved to a new location, you can submit SB 10(b) form at post office so that they can shift your account too.
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In Post Office can we Open for the FD for person Aged with 8 Minor for 5 years post office FD. In that maturity guardian Major will get the ( father ) -so far 5 years Interest will be Taxed ?
Hello Veera, We can open FD in the minor name, however the age limit is 10+. One can open in minor name and guardian/parent can operate the account
what interest rate payable for Premature Closure of FD Is there any penalty for premature F D s
Post office offers premature withdrawal , however the FD should be active for a minimum for 6 months. After that you can always withdraw. For withdrawals between 6 months to 1 year, the investor would get only savings account interest rate. For all withdrawals beyond 1 year, an exit penalty of 1% is charged.
Very Informative. I came to this page for one of the questions and instead, got all my questions answered here. Great work !
Thank you Sunil. Pls share such posts on your FB which might be useful to your friends too
It is stated that SB account holders of Post office can open Fixed Deposit online through Net Banking/ Mobile Banking.Have we to apply for Net Banking facility to Post office?
Yes. One time you need to approach post office and apply for net banking / mobile banking and then you can open FDs online there-on