SBI Or Post Office: Which Offers Better Returns On A 5-Year FD?

If you're considering investing in fixed deposits (FDs) for a long term and are torn between putting your money in a bank or a post office, we’ve got you covered. Here's a comparison of the 5-year FD offerings from the Post Office and the State Bank of India ( SBI ). Currently, the Post Office offers a return of 7.5% on a 5-year FD, whereas SBI offers a return of 6.75%. Let's break down the calculations to see how much profit you would make by investing ₹2 lakh in either institution for 5 years.

Profit in Bank

If you invest ₹2 lakh in SBI for 5 years at an interest rate of 6.75%, you will earn ₹79,500 in interest. Therefore, at maturity, you will receive a total of ₹2,79,500. Senior citizens benefit from a higher interest rate of 7.25% for a 5-year FD at SBI. In this case, senior citizens would earn ₹86,452 in interest, resulting in a total of ₹2,86,452 at maturity.

Profit in Post Office

For a 5-year FD in the Post Office, the interest rate is 7.5%. If you invest ₹2 lakh, you will earn ₹89,990 in interest over 5 years. Thus, at maturity, you will receive a total of ₹2,89,990. Senior citizens receive the same interest rate and total amount at maturity. Clearly, the Post Office offers a higher return on a 5-year FD compared to SBI.

SBI FD Interest Rates for Other Terms

More than 1 year but less than 2 years: 6.80%
More than 2 years but less than 3 years: 7.00%
More than 3 years but less than 5 years: 6.75%
More than 5 years but up to 10 years: 6.50%
Senior citizens get an additional 0.50% on these rates.

Post Office FD Interest Rates for Other Terms

1 year FD: 6.00%
2 year FD: 7.00%
3 year FD: 7.10%
5 year FD: 7.50%

For a 5-year FD, the Post Office offers a more attractive interest rate and higher maturity amount compared to SBI, making it a more profitable option for investors looking for better returns on their fixed deposits.