What is the Difference Between Fixed Deposits and Post Office Saving Schemes?

What Are Fixed Deposits?

What Are Post Office Saving Schemes?

What Are the Differences Between Fixed Deposits and Post Office Saving Schemes?

Here are the differences between these two investment options:


Fixed Deposits

Post Office Saving Schemes


Banks, NBFCs, and other financial institutions offer this investment option

The Indian Postal Service offers this investment option

Interest Rates

Interest rates are usually higher than post office saving schemes

Interest rates are usually lower than fixed deposits

Scheme Variation

Does not offer as much variations as compared to post office saving schemes

Variety of schemes catering to different investment goals and needs


Flexible deposit tenures, usually ranging from 7 days to 10 years

Tenures can vary according to the chosen scheme type


Penalty fees are applicable for premature withdrawals

Low set-up cost and no account maintenance charges

Relation to Government Bodies

Fixed deposits are backed by government institutions

Post office saving schemes are an initiative of government institutions

Now that individuals understand fixed deposits vs post office saving schemes better, they can compare these options before choosing one that suits them the best.

What Are the Features and Benefits of Fixed Deposits?

What Are the Features and Benefits of Post Office Saving Schemes?

FAQs on Fixed Deposits vs Post Office Saving Schemes

Do these investment options offer tax benefits?


Yes, both fixed deposits and post office saving schemes offer tax benefits to consumers.

However, claiming these benefits is easier on a post office saving scheme than a fixed deposit. Post office saving schemes are eligible for tax deductions under Section 80(C) of the Income Tax Act, and some schemes offer tax-free interest.

Can I withdraw my money before maturity in case of fixed deposits?

Withdrawing money before maturity in a fixed deposit may be subject to a penalty, known as a premature withdrawal penalty.

Can I choose the deposit tenure for post office saving schemes?

In post office saving schemes, the tenure of the deposit varies depending on the type of scheme.

Fixed deposit or post office saving scheme - Which one is easier to set up?

Post office saving schemes are relatively easier to set up when compared to fixed deposits. They require little to no maintenance cost, and post offices are located in nearly every city, town and village.