While investing hard-earned money, being careful and planning well ahead is always important. This is because different people have different financial portfolios and one investment scheme that will benefit one person might not have the same advantage for someone else. For this, you have to do thorough research of the schemes you wish to invest in. No investment scheme can guarantee a totally smooth process without ups and downs because the economy is volatile and the parameters can change any moment. What matters is how well suited you are to deal with a low phase if it occurs. The rate of interest, tenure and returns of different schemes may vary and these details usually decide which investment avenue is suitable for whom. So before you invest your money, you should do well to know all the nooks and crannies. 

Which should you choose between Post Office Savings and Bank Deposit?

There are many popular investment schemes in India. Post office savings and bank deposits are two such. They offer a lot of security and the interest rates are also suitable. But which should you choose? Consider the following parameters while deciding between the two:

Tax efficiency

The earnings that you make from the returns on the money you invest can be taxable and non-taxable. In regard to being tax-efficient, some schemes offered by post offices are better than bank fixed deposits. For instance, the earnings that you make from the Public Provident Fund scheme is completely exempt from tax. Whereas all returns from bank FDs are taxable. However, under Section 80C, it is possible to get tax savings on bank deposits.

Rate of interest

The first thing that an investor looks for is a favourable rate of interest. A high-interest rate guarantees good returns as well as a quick growth in funds. Bank fixed deposit rates vary between 6% to 8% and the rates for post office saving schemes are in the range of 4% to 9%. Even though back in April, 2020, the government slashed the interest rates of post office savings schemes like PPF and Time deposits, it has maintained steady rates in the past two quarters. Banks have also been cutting down on FD rates continuously because the RBI cut the repo rate by 2.5% since January 2019. 

Perks for senior citizens

For many senior citizens, retired or otherwise, a bank FD or a post office savings schemes act as a monthly income. Generally, senior citizens are offered rates higher than others in both places. However, apart from a slightly more interest rate, banks have no special perks for senior members of society. Post Offices have the Senior Citizens Savings Scheme or SCSS, tailored to act as an income for the account holder. Even the Monthly Income Scheme or MIS at post offices offer good rates of interest as compared to bank deposits. 

Quality of service

This is a less technical aspect of comparison between the two. But to avail either, you have to go through representatives and set procedures. With regard to customer service and efficiency, banks triumph over post offices. Banks possess the latest technologies and means to reach their customers faster and better. In comparison, post offices have a bit old-fashioned way of functioning. This is, however, not a bother if you are ready to put up with it. 

Both bank deposits and post office savings schemes are safe avenues to invest your money in. If you’re thinking of investing a lump sum for a period of time, bank deposits are more suitable for you. However, small nominal amounts invested on a regular basis can be done in post offices. The bottom line is, your financial portfolio influences which scheme you should choose. Weigh in the pros and cons well and investment will be a smooth experience.