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 DifferencePost Office Savings AccountPost Office Recurring Deposit Account
PurposeSimple and secure platform to inculcate the habit of savingOffers to save money systematically on a monthly basis for a fixed period of time
Interest Rate (p.a.)0.046.7% p.a. compounded quarterly
Minimum InvestmentRs.500, in multiples of 10 thereafterRs.100 per month, in multiples of 10 thereafter
Maximum InvestmentNo LimitNo Limit
EligibilityIndividuals including MinorsIndividuals including Minors
TenurePerpetual which means you can maintain the account for as long as you need5 Years
Tax ImplicationExempted Interest up to Rs.10,000 as per section 80TTANo TDS
  • After opening of your account you will get cheque book, debit card, netbanking facility, etc.
  • Minimum withdrawal is Rs.50
  • Nomination is mandatory
  • Facility to transfer of account from one post office to another with ease
  • Facility of premature closure after 3 years
  • Partial withdrawal is allowed
  • Rebate on advance deposit of RD Installments
  • Can be renewed for another 5 years after maturity

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 NumberInvestment OptionRate of Interest (p.a.)
1Post Office Savings Account4% payable annually
2Post Office Recurring Deposit6.70% per annum compounded quarterly
3Post Office Monthly Income Scheme (MIS)7​.4​% per annum payable monthly
4Post Office Time Deposit (POTD)1yr:6.9%, 2yr:7.0%, 3yr:7.1% & 5yr:7.5%
5Kisan Vikas Patra (KVP)7.5% compounded annually
6Public Provident Fund (PPF)7.10% compounded annually
7Sukanya Samriddhi Yojana (SSY)8.2​​​% compounded annually
8National Savings Certificate (NSC)7.70% compounded annually
9Senior Citizen Savings Scheme (SCSS)8.20% payable quarterly
10Mahila Samman Savings Certificate (MSSC)7.50% compounded quarterly