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Post office schemes: These three post office schemes give more returns than bank FD with 80C deduction, read details

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After the RBI raised the repo rate in August, all major banks have increased their interest rates on fixed deposits in an attempt to woo investors. On the other hand, small savings schemes or post office savings schemes are still providing higher returns than bank fixed deposits.


New Delhi. Bank’s fixed deposit rates are increasing. After the RBI raised the repo rate in August, all major banks have increased their interest rates on fixed deposits in an attempt to woo investors. Major banks like SBI are offering interest rates up to 5.65%. At the same time, HDFC Bank is offering interest rate up to 6.10%, ICICI Bank up to 6.10% interest rate, Axis Bank is giving interest rate up to 6.05%. PNB is offering a maximum interest rate of 6.10%.

On the other hand, small savings schemes or post office savings schemes are still providing higher returns than bank fixed deposits. Small savings schemes are preferable to bank fixed deposits in a rising interest rate environment as they have quarterly interest rate revisions as opposed to fixed interest rates of bank fixed deposits.

All these interest rates, however, are much lower than the widely popular small savings schemes like Senior Citizen Savings Scheme (SCSS), Public Provident Fund Account (PPF) and Sukanya Samriddhi.

Senior Citizen Savings Scheme (SCSS) Senior Citizen Savings Scheme (SCSS)

Elderly individuals looking for a safe investment who want to earn higher returns than bank fixed deposits. Usually, Senior Citizens opt for the Savings Scheme (SCSS). Currently, SCSS offers an interest rate of 7.4% per annum which is payable quarterly. In the current environment of interest rate hike, this SCSS interest rate is much higher than the fixed deposit rates offered by banks. A person above 60 years of age can set up a SCSS account either individually or jointly with his/her spouse.

Public Provident Fund Account (PPF)

PPF is a very popular small savings scheme among investors seeking tax exemption. Its interest and maturity amount are tax-free. Compared to the fixed deposit interest rates offered by banks like SBI, HDFC, PNB, BoB, Axis, HDFC Bank, Kotak Mahindra Bank, and many more, PPF now gives 7.1% per annum (compounded annually).

Sukanya Samriddhi Account (SSA)

Sukanya Samriddhi Account (SSA) is the most popular small savings scheme for parents who want to save money for their daughter’s future. SSA is now offering 7.6% compound interest rate per annum. This is much higher than the fixed deposit interest rates of the said banks. To open an SSA account in the name of a girl child below the age of 10 years, the guardian has to pay a minimum of Rs. 25 and maximum Rs 1,50,000 can be invested in a financial year. The amount deposited in this account gets tax exemption under section 80C.

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