What is the Difference Between Post Office FD or Bank FD?

What Is a Post Office Fixed Deposit (POFD)?

What Is a Bank Fixed Deposit?

What Are the Differences between POFD and Bank FD?

The differences between POFD and bank FD are as follows:


Post Office Fixed Deposit

Bank Fixed Deposit

TDS (Tax Deduction at Source)

Regular citizens can get TDS as per section 80C on availing the 5-year FD. Section 80TTB allows a tax exemption of up to Rs 50,000 for senior citizens.

Regular citizens are eligible for TDS. Section 80C applies to all average citizens except seniors, for whom there is section 80TTB.


Post offices offer tenure of 1 year, 2 years, 3 years and 5 years.

Banks offer it from 7 days to 10 years.

Minimum Deposit

Rs 1000 is to be deposited minimum while opening an FD account.

It depends on bank to bank

Withdrawal Facility

If you want to take your FD amount before it matures, the post office will cast a penalty based on your tenure.

Some banks may charge a penalty on your interest amount in case of pre-mature withdrawal.

What Are the Differences between Post Office FD and Bank FD in Terms of Interest Rates?

In terms of interest rates the differences between post office FD and bank FD are mentioned below:


Post Office FD

Bank FD

Change in Interest Rates

It stays fixed on a quarterly basis as post offices are backed up by the government.

It changes frequently based on interest rates provided by RBI. However, certain banks keep the interest rate constant so that it doesn't affect the account holders.

Payment of Interest Rates

The interest rates can be paid annually.

Buyers can pay the interest rates in monthly, quarterly or annual basis

Revision of Interest Rates

Interest rates in post offices remains constant and gets revised quarterly hence it doesn’t change often

Depending on repo rates the interest rates of bank FD might vary

An example of the post office FD and bank FD returns in case of different investment cases is as follows:


For 1, 2, 3 years Post Office Interest Rates Returns (Interest Rate: 5.5%)

For 1,2,3 years Bank Interest Rate Returns (Interest Rate: 6.8%, 7%, 6.5%)

Rs 50,000

Rs 58,947

Rs 53,488, Rs 57,444 and Rs 60,670

Rs 1 lakh

Rs 235,790

Rs 1,06,975, Rs 1,14,888 and Rs 1,21,341

Rs 2 lakh

Rs 589,474

Rs 2,13,951, Rs 2,29,776 and Rs 2,42,682

Rs 5 lakh

Rs 117,895

Rs 5,34,877, Rs 5,74,441 to Rs 6,06,704

Since different banks have their set criteria, it is better to talk with their representative. This way, you can have all the details regarding fixed deposits at both the post office and the bank. Opening an FD account in the bank where you have your savings account is not always necessary. You can get an FD account in a separate bank too. Moreover, going over the interest rates is crucial to see which one suits you better before deciding to choose post office FD or bank FD.

FAQs About Post Office FD vs Bank FD

Can I apply fixed deposit account online?

Yes. Banks and post offices both have the facility to apply for FD online or offline. In this regard, if you have an internet banking facility as an account holder in a bank or post office, you can apply from there.

Can I open a post office FD or bank FD for my 16-year-old son?


Yes, many banks and all post offices have this option where you can open an FD account for minors. In this case, the guardians or parents should hold maintenance rights till the child becomes 18 years old.

Moreover, post offices have this facility where you can open FD accounts under the name of the minor if they are 10 years of age.

What are the interest rates of FD offered by the post office?


The following are the interest rates offered by the Indian post office as per the financial year 1st January 2023 to 31st March 2023:

  • Tenure of 1 year- 6.6%
  • Tenure of 2 years- 6.8%
  • Tenure of 3 years- 6.9%
  • Tenure of 5 years- 7.0%

What will happen if I don’t withdraw the amount on maturity from the bank?

As per current RBI rules in 2022, if you don't withdraw the matured money, it will have a lesser interest rate than what you had earlier. Previously even after maturation, the funds would have gained similar interest rates as long as it was unclaimed.