Recurring Deposits (RD) provide a structured way to save regularly and achieve financial goals over a specific time frame. Both the State Bank of India (SBI) and the Post Office offer RD schemes, but which one provides better returns? Let’s delve into the features and returns of these schemes for a monthly investment of Rs 55,000.
Features of SBI Recurring Deposit
- Tenure Flexibility
- The deposit period ranges from 12 months to 120 months, offering flexibility to suit various financial plans.
- Minimum and Maximum Deposit Amount
- Minimum deposit starts at Rs 100 per month, with increments in multiples of Rs 10. There is no maximum limit.
- Penalty on Delayed Installments
- Delays in payments attract a penalty. If six consecutive installments are missed, the account will be prematurely closed.
- Maturity Instructions
- Customers can choose to credit the maturity amount to their savings or current account, issue an IOI, or transfer the amount to an STDR.
SBI RD Returns for Rs 55,000 Monthly Investment
- Total Invested Amount: Rs 33,00,000
- Estimated Returns: Rs 6,04,494
- Total Value at Maturity: Rs 39,04,494
Features of Post Office Recurring Deposit
- Interest Rate
- Effective from January 1, 2024, the interest rate is 6.7% per annum, compounded quarterly.
- Deposit Flexibility
- Minimum deposit starts at Rs 100 per month, with no maximum limit. Deposits must be made by the 15th day of the month or the last working day, depending on the account opening date.
- Loan Facility
- Loans up to 50% of the balance can be availed after one year, repayable with interest at 2% above the RD interest rate.
- Premature Closure
- Accounts can be closed prematurely after three years, though reduced interest rates apply.
- Extension of Account
- Accounts can be extended by five years, with the original interest rate applicable during the extension period.
- Maturity Terms
- The standard tenure is five years, extendable for another five years.
Post Office RD Returns for Rs 55,000 Monthly Investment
- Total Invested Amount: Rs 33,00,000
- Estimated Returns: Rs 6,25,122
- Total Value at Maturity: Rs 39,25,122
SBI vs Post Office RD: Which offers better returns?
For a monthly investment of Rs 55,000 over five years, the SBI RD yields a total maturity value of Rs 39,04,494, slightly lower than the Post Office RD’s Rs 39,25,122. While the difference may appear marginal, other factors like account flexibility, penalties, and additional features may influence your choice.
Both schemes offer unique benefits. SBI RDs provide the convenience of being available at all branches, while Post Office RDs allow for higher interest rates and account extensions. Evaluate your financial goals, deposit preferences, and tenure requirements to decide which option aligns best with your investment objectives.
