Post Office RD vs Bank FD: which earns more?
The core difference
A Recurring Deposit takes a fixed amount every month for 5 years - built for salaried savers putting aside ₹500-5,000/month. A fixed deposit is a one-time lump sum locked for a term. If money arrives monthly, RD; if you already hold a lump sum, FD/TD.
Interest comparison
Post Office RD currently earns about 6.7% p.a., compounded quarterly. Bank FDs for general customers run roughly 6-7.5%, with seniors getting +0.5%. The RD rate is set by the government and revised quarterly - it moves slowly, banks move faster. Check the live figure with our RD calculator and compare with your bank's current card.
Safety
Post office deposits carry a sovereign guarantee - the Government of India backs every rupee, no cap. Bank deposits are insured by DICGC up to ₹5 lakh per depositor per bank. For amounts under ₹5 lakh both are effectively safe; above that, post office schemes have an edge.
Tax treatment
Neither gives 80C deduction. Interest on both is fully taxable at your slab. Banks deduct TDS above ₹40,000 interest/year (₹50,000 for seniors); post office RD/TD interest has no TDS but is still taxable - declare it yourself.
Which should you pick
Monthly saver under ₹5 lakh: whichever pays more - run both through the calculators. Large lump sum above ₹5 lakh: post office TD/NSC for the sovereign cover. Need flexibility: bank RDs let you close early with a small penalty; post office RD closure rules are stricter (premature closure allowed after 3 years, at SB rate + penalty conditions).
Quick answers
Is post office RD safer than bank FD?
Both are safe under ₹5 lakh (DICGC covers banks). Post office deposits have a sovereign guarantee on the full amount with no cap.
What is the minimum post office RD deposit?
₹100 per month, no upper limit. Missed months attract a small default fee.
Can I close post office RD early?
Yes, after 3 years, but the interest converts to the lower savings-account rate for the period held.