There are various options available for Post Office Savings Schemes like National Savings Recurring Deposit Account, National Savings Monthly Income Account(MIS), Sukanya Samriddhi Account(SSA), Senior Citizens Savings Scheme Account(SCSS), National Savings Certificates (NSC), Kisan Vikas Patra(KVP) and various others.
Post Office Time Deposit Account (TD) is one of these saving schemes with post offices. It is also known as National Savings Time Deposit Account (TD). Here you are going to get each and every detail about Post Office Time Deposit.
Depositors can deposit in Post Office Time Deposit for 1 year, 2 years, 3 years and 5 years only. Any number of accounts can be opened but for these lock-in periods only. 5-year TDs will give the tax-benefit under section 80C. Other than these, TDs are not available for other tenors. But, there are other options available with post offices where you can make deposits for 10 years. If you want flexibility in FD tenor, consider Bajaj Finance FDs where you get options from 12-60 months for tenor.
- An adult can open a single account or joint account with up to 3 adults individuals.
- A minor above 10 years is allowed to open a TD account in his own name.
- Parents or a guardian can open a TD on behalf of a minor.
- A guardian is allowed to start a TD on behalf of a person of unsound mind.
With the post office, you can open a TD account with a minimum amount of Rs.1000. Deposit must consist of the amount in multiples of 100 only. The attractive point is that there is no maximum limit to deposit in TD with the post offices.
Post office fixed deposit calculator is available online where you can compute your estimated returns on an amount to be deposited.
TD accounts with post offices can be extended further for the same tenor for which the account was opened initially by the depositor. But it should be extended in the following prescribed manner:
1 year account – within 6 months of maturity.
2 years account – within 12 months of maturity.
3 or 5 years account – within 18 months of maturity.
Depositor needs to submit the prescribed application form at the concerned post office along with his passbook issued by the post office. The interest rate applicable for the extended period will be the same as pertaining rates on the day of maturity.
Interest is payable annually on a Post Office Time Deposit but it is calculated quarterly. Interest rate is between 5.5%-6.7% applicable as follows:
1 year TD 5.5%
2 year TD 5.5%
3 year TD 5.5%
5 year TD 6.7 %
Note: Depositors should notice that there is no provision of providing additional interest on the amount of interest that is due for payment but you have not withdrawn it.
With corporate FDs such as Bajaj Finance FD, you can earn high interest rates up to 6.85%.
Number of Accounts
There is no limit to open time deposit (TD) accounts. Investors can open TD accounts as much as they want.
Premature withdrawal is not allowed for TDs.
For 1-year TD, withdrawal after 6-months tends to lose your interest at pre-fixed rates and savings account Interest rate will be applicable on your funds.
For 2/3/5 years TD, you cannot close deposit before 1 year. And TD interest rate will be cut down by 2 % for completed years, and for the rest period, savings account Interest rates will be applicable.
You need to submit the prescribed application form with a passbook to the concerned Post Office officials.
The Bottom Line
Post Office Time Deposits are popular for safety. However, there is a downside also. They do not offer flexible tenor options, easy premature withdrawal facility and paperless documentation. On the other hand, Bajaj Finance offers deposits that are high return investments. With Bajaj Finance FD you can avail flexible tenors, online FD calculator, flexible premature withdrawal and paperless documentation as well.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at Highlight Story.