A common option for individuals seeking a safe way to increase their funds is a fixed deposit (FD). FDs alternatives are available from the Indian Post Office and the State Bank of India (SBI), but you might be unsure whether it is a better option given the recent changes in interest rates.
Interest Rate Comparison
In 2024, SBI increased its FD interest rates on specific tenures by up to 50 basis points (0.50%). For example, deposits maturing in 7 days to 45 days now earn 3.50% interest. For longer terms, FDs maturing in 211 days to less than one year offer 6.50%.
In comparison, the Post Office has also revised its term deposit rates. A three-year post office term deposit now offers 7.1%. Other tenures like one-year, two-year, and five-year deposits give interest rates of 6.9%, 7%, and 7.5%, respectively.
Here’s a detailed look at the current interest rates:
SBI FD Rates below Rs. 3 Cr w.e.f. June 15, 2024
| Tenors | FD Rates for Public | FD Rates for Senior Citizen |
| 7 days to 45 days | 3.5 | 4 |
| 46 days to 179 days | 5.5 | 6 |
| 180 days to 210 days | 6.25 | 6.75 |
| 211 days to less than 1 year | 6.5 | 7 |
| 1 Year to less than 2 years | 6.8 | 7.3 |
| 2 years to less than 3 years | 7 | 7.5 |
| 3 years to less than 5 years | 6.75 | 7.25 |
| 5 years and up to 10 years | 6.5 | 7.50* |
Source: SBI.co.in
*Including an additional premium of 50 bps under the ”SBI We-care” deposit scheme.
Post office Fixed Deposits
| Period | Rate |
| 1yr.A/c | 6.90% |
| 2yr.A/c | 7.00% |
| 3yr.A/c | 7.10% |
| 5yr.A/c | 7.50% |
Source: Indiapost.gov.in
Key Differences
Returns: In most cases, the Post Office Term Deposits currently offer higher returns compared to SBI FDs.
Accessibility: SBI FDs with terms ranging from seven days to 10 years can be opened and managed online via net banking and the YoNo App. On the other hand, to open Post Office FDs with periods of one, two, three, or five years, you must physically visit the nearest post office branch.
Government Backing: Post Office FDs are backed by the government, providing an added layer of security. The interest rates are revised every quarter. Whereas SBI FDs are insured upto 5 lakh by DICGC, a subsidiary of the Reserve Bank of India (RBI)
Interest Rate Fluctuation: SBI fixed deposit rates are influenced by repo rates set by the RBI and are not revised every quarter. Recently, RBI reduced the repo rate to 6.25% from 6.50% after the monetary policy meeting.
Which is Better for You?
To illustrate, consider investing for three years. With SBI, you would receive a 6.75% interest rate, while the Post Office offers 7.1% for the same period. For a five-year FD, SBI offers 6.5%, while the Post Office provides a more attractive rate of 7.5%.
These examples suggest that Post Office Term Deposits may offer better returns than SBI FDs. However, it’s up to the investor to decide where to invest according to their requirements and the returns expectation, considering all aspects.
As a smart investor, consider your own requirements and preferences while deciding between Post Office Term Deposits and SBI FDs. While SBI offers the ease of internet access, Post Office FDs often give greater interest rates. Before choosing, consider every aspect.
Disclaimer: The information is covered based on the latest research and development available. However, it may not fully reflect all the current aspects of the subject matter. Moneydaily.in advises readers to visit the official websites of SBI and IndiaPost for further information.
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