Post Office Fixed Deposit: 5 Reasons it Makes Sense

Post Office Fixed Deposits offer incredibly high rates of return; in fact, among the highest one can expect when it comes to fixed deposits in India.

That is the reason we wholeheartedly suggest Post Office Fixed Deposits whenever you are thinking of having FDs or Fixed Deposits put in place, for yourself or for your family.

In this article, we highlight 5 vital reasons for which it makes sense to invest in Post Office Fixed Deposit options.

Guaranteed Returns

A major factor in favour of Post Office Fixed Deposits is the fact that the returns on them are guaranteed by the Government of India. This is a very important advantage, given the uncertain times we are living in, particularly against the backdrop of the entire PMC Bank fiasco.

You definitely do not want to end up with a scenario like in the PMC Bank instance, where you will not be able to withdraw your own money!

With Post Office Fixed Deposits, that will never be an issue since returns are guaranteed by the Government of India.

High Rate of Interest

As compared to most other fixed deposit options, Post Office Fixed Deposits offer significantly higher rates of interest. Typically, we are looking at interest rates anywhere between 6.9 to 7.3 percent per year, which is reasonably higher than what we see in case of other fixed deposit options such as regular fixed deposits offered by banks.

Further, this variation in interest rate is determined purely by the FD tenure and nothing else; there is no discrimination of any kind or no other differentiating factor that comes into play. It is simply a matter of the duration for which the FD is intended – up to 3 years, the interest rate is 6.9 percent while 5 years and beyond, it is 7.3 percent.

For a lot of investors in Post Office Fixed Deposits, this is definitely a big incentive to invest in Post Office FD options, versus other avenues.

Convenient Opening and Transfer Options

The latest records indicate that India has more than 150,000 Post Offices, which is by far the largest network of Post Offices in the world. When it comes to opening a Post Office FD account, you can do so in any of these 150,000 Post Offices in India.

Further, you can easily transfer your Post Office FD account from one Post Office in India to another, without a hitch. So, for example, if you opened your PO FD account in Kolkata and get transferred in your job to Lucknow, you can easily transfer your Post Office FD account to Lucknow, to the convenient Post Office of your choice.

This gives depositors immense flexibility in operating their PO FD accounts with ease.

Post Office Fixed Deposit
One of the Hundreds of Thousands of Post Offices in India where you can easily open a Post Office Fixed Deposit Account. Image Courtesy – The Statesman

Minimal Deposit Requirements

Regular Fixed Deposits with banks and companies often have large minimum deposit requirements, such that most regular depositors simply cannot afford them.

But in the case of Post Office FD, these requirements are really very basic such that everyday folks in India can easily afford them. For instance, the minimum amount required to open a Post Office Fixed Deposit in India is a mere Rs. 200/-. After that, further deposits can be made into the account in multiples of Rs. 200/- up to any desired level.

This makes it really very easy for depositors to invest in PO FD options, without feeling any financial burden whatsoever.

Easy Liquidity

Many Fixed Deposit options do not really offer easy liquidity; even in really urgent scenarios, it can be challenging to withdraw funds.

With Post Office Fixed Deposits though, this is never a challenge. Notwithstanding the lock-in periods that are applicable, depositors can withdraw funds prematurely in case of an emergency. Further, depositors have an additional option to avail of a loan against the deposit made, allowing the FD to remain as it is.


For all the reasons as cited above, it makes a lot of sense to opt for Post Office Fixed Deposits. In fact, it is for these reasons that already, there are millions across India who have entrusted the veritable network of Post Offices in the country with their hard-earned savings.

In case you have not yet considered Post Office Fixed Deposits in your overall mix of savings and investment options, then we wholeheartedly recommend doing so!