A Fixed Deposit in a post office can be opened by a minor above 10 years old besides, of course, by an adult Indian. Two or a maximum of 3 persons can also jointly open an FD. A guardian can open in the name of a minor. There is also a provision of an adult starting an FD on behalf of a person with an unsound mind.
Tenures
Fixed deposits in post offices come with tenures of full years – 1 year, 2 years, 3 years and 5 years. After an FD has matured, an investor can renew it for the same period for which it was invested says the Indiapost website.
Post Office FD rates
Let’s calculate returns on post office FDs on Rs 3 lakh. Invested for 1 year, it would fetch an interest of 6.9%. Therefore, the total interest would Rs 21,242 and the total amount on maturity Rs 321,242.
Similarly, a 2-year FD would generate an interest of Rs 44,665, since it offers 7% rate of interest. The total amount payable on maturity will be Rs 344,665. A 3-year FD carries an interest rate of 7.1% and a 5-year FD bears an interest rate of 7.5%. Therefore, the interest that a 3-year and 5-year FD would fetch is Rs 70, 523 and Rs 1,34,984 respectively.
Premature withdrawals
If an FD is closed after 6 months but before 1 year of opening it, post office savings account interest rate will be applicable. If FDs of 2/3/5-year tenures are closed prematurely after 1 year, the interest that will be paid will be a good 200 basis points lower than the rate of interest originally agreed for the completed years. For the particle year, savings account interest rates will be paid.
Post Office FD calculator
The minimum amount of money that one can invest is Rs 1,000 which can be raised by multiples of Rs 100. There is no ceiling on buying FDs from a post office.
Annual compounding
Interests are paid annually and not quarterly like banks. A point to note is that the 5-year FDs are eligible for income tax deductions according to Section 80C of the Income Tax Act, 1961.
The good old neighbourhood post office offers Fixed Deposits that are compounded annually. Some of the investment instruments in the post office have served Indians for more than a century. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
