SBI 5-Year FD vs Post Office FD: Which can offer better returns on Rs 3,50,000 investment over 5 years?

Compare SBI’s 5-year Fixed Deposit (FD) offering 6.50% interest with Post Office FD’s 7.50%. Discover which investment gives higher returns on Rs 3,50,000 while understanding key features and benefits.

ZeeBiz WebTeam | Jan 21, 2025, 03:47 PM IST

Fixed Deposits (FDs) are secure investment options offering guaranteed returns over a specific period. Among popular choices are SBI and Post Office FDs. SBI’s 5-year FD provides a 6.50% annual interest rate, while the Post Office FD offers 7.50%. Learn about their features, benefits and suitability especially for tax-saving opportunities under Section 80C of the Income Tax Act.

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Overview of SBI Fixed Deposit

Overview of SBI Fixed Deposit

SBI offers fixed deposit options with interest rates ranging from 3.50%-7.25% p.a. for the general public and 4.00%-7.75% p.a. for senior citizens, depending on tenure. The interest rate for the SBI 5-Year Tax Saving FD is set at 6.50% p.a.

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Return on SBI 5-Year FD

Return on SBI 5-Year FD

  • Invested Amount: Rs 3,50,000
  • Interest Rate: 6.50% p.a.
  • Estimated Returns: Rs 1,33,147
  • Total Value on Maturity: Rs 4,83,147

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Features of SBI Fixed Deposit

Features of SBI Fixed Deposit

  • Flexible tenures ranging from 7 days to 10 years.
  • Senior citizens earn an additional interest rate of 0.50% on applicable tenures.
  • Tax-saving FD offers benefits under Section 80C of the Income Tax Act.
  • NRIs can invest in NRO, NRE, RFC, and FCNR (B) fixed deposits in multiple currencies.

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Overview of Post Office Fixed Deposit

Overview of Post Office Fixed Deposit

The Post Office Time Deposit (TD) is available for tenures of 1, 2, 3, and 5 years, with an interest rate of 7.50% p.a. for the 5-year option.

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Return on Post Office 5-Year FD

Return on Post Office 5-Year FD

  • Invested Amount: Rs 3,50,000
  • Interest Rate: 7.50% p.a.
  • Estimated Returns: Rs 1,57,482
  • Total Value on Maturity: Rs 5,07,482

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Features of Post Office Fixed Deposit

Features of Post Office Fixed Deposit

  • Minimum deposit starts at Rs 1,000; no maximum limit.
  • Annual interest is credited to the depositor's savings account.
  • Eligible for Section 80C tax benefits under the Income Tax Act.
  • Accounts can be opened individually, jointly, or on behalf of minors.
     

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Premature Closure Rules

Premature Closure Rules

  • SBI FD: Allowed, but penalties apply based on tenure and withdrawal time.
  • Post Office FD: Allowed only after 6 months, with reduced interest rates applicable for early withdrawals.

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Tax-Saving Benefits

Tax-Saving Benefits

Both SBI 5-Year Tax Saving FD and Post Office 5-Year FD are eligible for tax deductions under Section 80C, but the interest earned is taxable in both cases.

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Ease of Operation

Ease of Operation

SBI FD: Offers flexibility for online and branch operations, along with multiple investment options.
Post Office FD: Requires physical visits for transactions, but offers straightforward account management.

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SBI 5-Year FD vs Post Office FD

SBI 5-Year FD vs Post Office FD

Higher Returns: Post Office FD (Rs 5,07,482) outperforms SBI FD (Rs 4,83,147) for the same investment.

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