If you are looking at better interest rates on your money, than some of the post office small saving schemes could offer better returns than even bank deposits. However, if you are a tech savvy individual, who is also unwilling to ignore service aspects, than banks are better. However, our comparison is only in terms of returns and not service and technology. Here are 3 post office small saving schemes that offer better returns than bank deposits.
Post office savings account
The post office small savings account offers an interest rate of 4 per cent, which is much better than what most big banks in the country offer. For example, the State Bank of India offers an interest rate of just 2.70 per cent for balances in the savings account.
Similarly, if the balance in your savings account is less than Rs 50 lakhs, ICICI Bank offers an interest rate of 3 per cent. It's the case for almost all of the government banks, where the interest in SB account has been reduced and is much lower than the post office savings account.
Some banks like Yes Bank offer a higher interest rate, however, people have been worried about safety as well.
National Savings Certificates (NSC)
If you are looking at a tenure of 5-years, the best bet would be the National Savings Certificate. The interest rate offered on the same is 6.8 per cent, while a bank deposit of 5-years offers much less.
State Bank of India offers an interest rate of 5.4 per cent on its deposits of 5 years, which is much lower than the Office National Savings Certificate
Similarly, ICICI Bank offers an interest rate of 5.75 per cent on its 5-year deposit, which is a good 1 per cent lower, than the NSC.
Of course, both can offer you tax benefits under Sec80C of the Income Tax Act. In terms of service and technology, banks may have the edge, but, an NSC may not need regular service, as you would buy once and redeem once.
Senior Citizen Savings Scheme (SCSS)
If you are a Senior Citizen, and looking for returns, you have to choose the post office Senior Citizen Savings Scheme over Bank Fixed Deposits. The scheme offers an interest rate of 7.4 per cent, which none of the government banks offer or the larger private sector banks.
State Bank of India offers an interest rate of 5.9 per cent for senior citizens on its deposits of 5 years, which is much lower than the Senior Citizen Savings Scheme. Similarly, ICICI Bank offers an interest rate of 6.25 per cent on its 5-year deposit, which is low, compared to the Senior Citizen Savings Scheme.
If a retired individual, who is also a senior citizen is looking for returns he should choose the SCSS.
About the author
Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning.