SBI or the State Bank of India has cut fixed deposit (FD) rates across all tenures. If you an SBI account holder, you don’t need to worry, but you will have to take some action. For a fixed deposit investor, there are other investment options where he or she can get a higher rate of interest and thereby earn more money. Post Office Fixed Deposit is one such option, say tax and investment experts. Fixed deposits have always been an attractive investment option for many, but the Post Office Time Deposit (POTD) is an avenue where you can get a higher rate of interest than the bank deposit.

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As per the new interest rates mentioned on the official website of the SBI — sbi.co.in — the SBI is offering 4.5 per cent to 6.25 per cent fixed deposit interest rates. The largest Indian commercial bank is offering 4.5 per cent interest on FDs maturing in seven days to 45 days, whereas on deposits maturing in 46 days to 179 days the bank is offering 5.50 percent and for deposits maturing in 180 days to less than one year the latest interest rates are 5.80 per cent. For all SBI fixed deposits from one year to 10 years, the interest rate offered by SBI is 6.25 per cent.

Source: sbi.co.in

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Comparing the SBI Fixed Deposit rates with Post Office Fixed Deposit rates, one can get 6.9 per cent fixed deposit interest rate on a post office FD for the deposit tenure of one year to three yeas. For post office fixed deposit for the period of five years and above, the interest rate offered by post office is 7.7 per cent, which is whopping 1.45 per cent higher than the SBI fixed deposit interest rate for the same period.

Speaking on the post office Fixed Deposits, Jitendra Solanki, a SEBI registered tax and investment expert said, "For five years or above, one can choose tax saving FD also. In Post Office tax saving FD, one gets 7.7 per cent returns plus income tax benefits under Section 80C of the Income Tax Act, 1961. However, to avail income tax benefits, one will have to open a tax-saving fixed deposit account, otherwise, he or she won't be able to avail the benefit even when the period of post office FD is 5 years or more."