What do you mean by Post Office Fixed Deposit?
It is a financial investment plan offered by the post offices of India under the Indian Postal Service. Post office fixed deposit schemes are also considered post office term deposits. It is known as one of the most reliable investment instruments which are backed by the government. Fixed deposit accounts in post offices will help you fetch benefits such as higher returns with a lower minimum deposit limit, flexible tenure and also the facility of loan against fixed deposit.
Features of Post Office Fixed Deposit
- Interest - Interest in post office fixed deposit is payable annually and can be credited into the savings account of the depositor.
- Tenure - Post office fixed deposit is available for a tenure of 1 year, 2 years, 3 years and 5 years.
- Opening of account - Fixed deposit in the post office can be opened through cheque or cash.
- Withdrawal - Account holders of fixed deposit account is allowed to do a premature withdrawal after 6 months of opening an account.
- Convertibility - Fixed deposit account in the post office can be converted into a joint account with not more than 3 adults.
- Offline and online - Post office fixed deposit accounts can be opened using online as well as offline mode.
- Tax saving - Account holders who have 5 years of tax saving post deposits are eligible for deduction up to the limit of Rs 1,50,000 under section 80C of the Income Tax Act, 1961.
Benefits of Post Office Fixed Deposit
- Considerable interest rate - Post office fixed deposit provides a considerable rate of interest from 5.5% to 6.70%.
- No risk - As there is no volatility and market fluctuations in post office fixed deposit. There is no chances of loosing your money. And this leads to zero or no risk.
- Guaranteed returns - In case of post office fixed deposit the return is guaranteed as it is backed by the government and that's why it is also considered as one of safest option of investing.
Minimum Amount to start your POFD
Investors can start their post office fixed deposit account with a minimal amount of Rs 1000. There is no upper limit on the maximum amount for opening a post office fixed deposits scheme.
You can make multiple accounts in the post office but you can only be able to make one deposit per account in the post office fixed deposit schemes.
Interest Rates of Post Office Fixed Deposit
Let's look at the post office FD interest rates 2023 :
| Tenure | Interest Rate (% p.a.) for General Public | Interest Rate (% p.a.) for Senior Citizen |
| 1 year | 5.50 % | 5.50% |
| 2 years | 5.50% | 5.50% |
| 3 years | 5.50% | 5.50% |
| 5 years | 6.70% | 6.70% |
How to Open a Post Office FD Account?
You need to fulfil the eligibility criteria before opening a post office fixed deposit account. Following are the eligibility criteria:
- There should be an individual.
- Minor who is above 10 years of age are eligible.
- If anyone has an unsound mind or if he/she is minor then there must be a legal guardian on behalf of them.
- In the case of the joint account, a maximum of 3 adults should be present.
Following are the documents required to open a post office fixed deposit :
- Individuals must have a PAN card.
- Individuals must have address proof such as an electricity bill or ration card.
- There must be proof of photo ids such as an Aadhaar card or voter card.
- Individuals must have 2 passport size photographs.
How to open a post office fixed deposit account
An individual can open their POFD (Post office fixed deposit) account in two ways :
1. Online mode - The facility of online mode is available via mobile banking. The following conditions should be fulfilled
- PAN card
- Valid mobile number
- Valid email id
- Active savings account
- Active debit card
- Verified KYC documentation
2. Offline mode - Individuals can also open their POFD account through offline mode
- Visit your nearest post office branch along with the KYC documents required.
- Take an enquiry regarding the post office account such as interest rate.
- Post office's authorized representative will guide you regarding the process of account opening.
- Don't forget to collect a receipt while opening a term deposit.
Conclusions
Some key points you should remember before investing in fixed deposits of post office :
- Minor must get the account converted in their name if they attain 18 years of age.
- If depositors wish to get their interest credited to their saving account, they can easily do so.
- Once the fixed deposit has matured there will be no extra interest chargeable to the depositor.
Do an enquiry with the authorized officer of the post office before investing your money in it.
What is the highest and lowest rate of interest in a post office fixed deposit account?
The highest rate of interest in post office fixed deposit is 6.70% for tenure maturing 5 years, whereas the lowest rate is 5.50%.
Is it possible to break the fixed deposit account in the post office?
Yes, it is possible to break the fixed deposit account but you need to wait for 6 months after opening a fixed deposit account.
How many individuals can open an FD account jointly in a post office?
A maximum number of 3 members can open a fixed deposit account in the post office jointly.
What is the minimum amount required to open a fixed deposit account?
To open a fixed deposit account in the post office you need a minimum amount of Rs 1000.
Is it risky to invest in a Post Office Fixed Deposit Account?
No, it is not risky as it is backed by the government. It is considered one of the safest options for investing your money.