The post office fixed deposit (FD) is an excellent small savings scheme that helps countless small investors to build their wealth. Fixed deposits are offered by banks and non-banking finance companies (NBFCs) as well, but the post office FD scheme is extremely attractive to investors.
FDs are risk-free investments that offer guaranteed returns at lucrative interest rates. They are also subject to compound interest which helps multiply the investor’s considerably. The government revises the post office FD interest rates at the beginning of each quarter of the financial year. For the quarter ending September 2021, the post office FD rates have remained unchanged. Here’s a look at the postal FD rates:
| Period | Interest rate |
| 1 year | 5.5% |
| 2 years | 5.5% |
| 3 years | 5.5% |
| 5 years | 6.7% |
When compared to the prevailing rates of interest offered by bank fixed deposits, post office fixed deposits seem more lucrative for investors. Based on these interest rates, investors can calculate the maturity amount that they will receive using a post office FD calculator with formula:
A = P (1 + (r/400))^n
Where
A stands for the maturity amount
P is the principal amount
r is the interest rate
n refers to the number of quarters in the period chosen
Conclusion
The amount receivable after a fixed deposit reaches maturity depends on the postal FD interest rates as well as the frequency at which an investor opts to get period payouts whether monthly, quarterly or annual. If an investor chooses to receive the full amount upon maturity, the interest is reinvested and compounded. Such an FD yields better returns than those that give recurring returns.
