Difference Between Post Office Savings Account & RD Account
There are a lot of post office saving schemes offered by post office in India to the people having variety of investment needs. This set of financial instruments encourages saving and provide financial security to the people of India.
As these Post Office schemes are backed by the government, they are safe and reliable investment avenues for the individuals. Post offices in India offer their services to the people through a vast network of over 1.55 lakh post offices and around 5.70 lakh employees.
Two important post office saving schemes offered by post office in India are Post Office Savings Account and Post Office Recurring Deposit. Both offer investment benefits but they differ in objective of investment. Let us check out major differences between Post Office Savings Account and Post Office Recurring Deposit in order to make proper investment decision.
| Basis for Difference | Post Office Savings Account | Post Office Recurring Deposit Account |
|---|---|---|
| Purpose | Simple and secure platform to inculcate the habit of saving | Offers to save money systematically on a monthly basis for a fixed period of time |
| Interest Rate (p.a.) | 0.04 | 6.7% p.a. compounded quarterly |
| Minimum Investment | Rs.500, in multiples of 10 thereafter | Rs.100 per month, in multiples of 10 thereafter |
| Maximum Investment | No Limit | No Limit |
| Eligibility | Individuals including Minors | Individuals including Minors |
| Tenure | Perpetual which means you can maintain the account for as long as you need | 5 Years |
| Tax Implication | Exempted Interest up to Rs.10,000 as per section 80TTA | No TDS |
| Others |
|
|
Particulars of Post Office Savings Account It is beneficial for the persons who want to start saving small amounts and want to earn fixed interest on their investment with minimum risk. Persons can open only one savings account in one post office. Minors over 10 years of age can open and operate a post office savings account on independent basis. There is no lock-in of investment. The interest in the Post Office Savings Account is calculated monthly and credited annually into the account.
Traits of Post Office RD Account: Post Office RD account permits one early withdrawal of up to 50% of the balance after one year from the RD account's opening date. If you want to continue with the RD account after its maturity i.e. even after 5 years, then you can extend RD for 5 more years making the maximum tenure is 10 years.
Post Office Investment Options
| Serial Number | Investment Option | Rate of Interest (p.a.) |
|---|---|---|
| 1 | Post Office Savings Account | 4% payable annually |
| 2 | Post Office Recurring Deposit | 6.70% per annum compounded quarterly |
| 3 | Post Office Monthly Income Scheme (MIS) | 7.4% per annum payable monthly |
| 4 | Post Office Time Deposit (POTD) | 1yr:6.9%, 2yr:7.0%, 3yr:7.1% & 5yr:7.5% |
| 5 | Kisan Vikas Patra (KVP) | 7.5% compounded annually |
| 6 | Public Provident Fund (PPF) | 7.10% compounded annually |
| 7 | Sukanya Samriddhi Yojana (SSY) | 8.2% compounded annually |
| 8 | National Savings Certificate (NSC) | 7.70% compounded annually |
| 9 | Senior Citizen Savings Scheme (SCSS) | 8.20% payable quarterly |
| 10 | Mahila Samman Savings Certificate (MSSC) | 7.50% compounded quarterly |