SBI vs Post Office recurring deposits (RDs): Check latest interest rates and other details here
New Delhi: Recurring deposit (RD) is an investment tool that allows people to regularly deposit a fixed amount of money and generate interest income. It is considered as a secure investment option among the salaried class and middle-income group. State Bank of India (SBI), the country’s largest lender and Post office offer recurring deposit options to customers.
All the scheduled commercial banks like State Bank of India (SBI), HDFC Bank, ICICI Bank, Bank of Baroda, Axis Bank, Punjab National Bank (PNB) etc offer the facility of recurring deposits for various tenures.
It may be noted that you can open a recurring deposit account either with a bank or a Post Office RD is the type of term deposit that lets the customers save a fixed amount through regular monthly deposits over a fixed period of time. The recurring deposit comes with the option to deposit a pre-specified amount at pre-decided intervals.
Investors have the option to choose the fixed amount that they want to invest every month. The account holder cannot alter the instalment amount once it is fixed. For example, if you start an RD account with a bank for Rs 2,000 every month for a year, you will have to keep investing the same amount on the same date every month for a year.
Here is how recurring deposits offered by the Post Office and SBI differ:
- Tenure: Post Office recurring deposit comes with a tenure of 5 years. The tenure for the SBI RD account varies between 1 year and 10 years. This means that while an SBI recurring deposit account can be opened for a minimum period of 12 months and the maximum 120 months, Post Office RD account has a five-year tenure only.
- Interest rate: State Bank offers an interest rate ranging from 5.80 per cent to 6.25 per cent on its recurring deposits. For senior citizens, the interest is 0.50 per cent higher. SBI RD interest rate are the same as applicable to bank’s TDR/STDR for the period of the RD. Comparatively, the post office offers interest rate of 7.3 per cent per annum which is compounded quarterly.
- Account opening: The recurring account in SBI can be opened online through SBI net banking if the customer has internet banking login credentials. However, in order to open post office RD account, you need to visit nearest post office branch
- Minimum deposit: An individual can deposit a minimum Rs 100 and in multiples of Rs 10 thereafter in SBI RD account. However, a minimum of Rs 10 a month or any amount in multiples of Rs 5 is required for Post office RD. There is no maximum limit set on the investment in SBI or the post office.
- Penalty charges: If you do not make a subsequent deposit on the prescribed day in a Post Office RD account, a default fee of Re 0.05 for every Rs 5 is charged. If you miss four payments, your account will get discontinued, which can be revived in 2 months. But if the same is not revived within this period, no further deposit can be made. For non-deposit of monthly instalments in the recurring deposit account, SBI charges Rs 1.50 per Rs 100 per month for RD account of period 5 years and less. Whereas, Rs 2 per Rs 100 per month is charged for the RD account of the period above 5 years.
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