Investing in a reliable and secure savings plan is essential for financial stability, and the Post Office Recurring Deposit (RD) Scheme is one of the best options available for risk-free savings. Whether you’re planning for future expenses or looking for a disciplined savings habit, depositing Rs 1,500 every month in the Post Office RD scheme can yield impressive returns over five years.
In this detailed guide, we will break down the benefits, interest rates, calculation methods, and other essential details related to the Post Office RD Scheme.
What is the Post Office RD Scheme?
The Post Office Recurring Deposit (RD) Scheme is a government-backed savings option that allows individuals to invest a fixed amount every month and earn compounded interest. This scheme is best suited for individuals who want to develop a habit of saving regularly while earning attractive returns.
Features and Benefits
- Guaranteed Returns: As a government-backed scheme, the Post Office RD provides secure and guaranteed returns.
- Attractive Interest Rates: The scheme offers an interest rate of 7.50% per annum, which is compounded quarterly.
- Flexible Deposit Amounts: You can start with a minimum deposit of Rs. 100 per month and increase the deposit in multiples of Rs. 10.
- Loan Facility Available: After one year, you can take a loan up to 50% of the balance in your RD account.
- Premature Withdrawal Option: Though the scheme requires a 5-year commitment, you can withdraw after 3 years with some penalty.
How Much Will You Get After 5 Years?
To calculate the maturity amount, we use the RD maturity formula:
Where:
- P = Monthly deposit (Rs. 1,500)
- R = Annual interest rate (7.50% or 0.075)
- i = Interest rate per quarter = R/4 = 0.01875
- n = Number of quarters = 5 years × 4 = 20
Using this formula:
So, after 5 years, your total investment of Rs. 90,000 will grow to approximately Rs. 1,05,870.
Also Check: Post Office NSC Scheme! You can make 43 lakh rupees in just 5 years, know how
How to Open a Post Office RD Account?
Step-by-Step Guide
- Visit Your Nearest Post Office
- Locate your nearest post office branch and inquire about the RD scheme.
- Fill Out the Application Form
- Provide details like your name, address, PAN card, and nominee details.
- Submit the Required Documents
- Aadhaar Card (for identity and address proof)
- PAN Card (mandatory for deposits above Rs. 50,000)
- Passport-size photographs
- Deposit the First Installment
- Pay the initial deposit amount of at least Rs. 100.
- Receive the Passbook
- You will be provided with a passbook to track your monthly deposits and interest earned.
Post Office RD vs. Other Saving Schemes
| Feature | Post Office RD | Bank RD | Fixed Deposit (FD) |
| Interest Rate | 7.50% | 6.00% – 7.00% | 6.00% – 7.50% |
| Lock-in Period | 5 years | 6 months – 10 years | 1 year – 10 years |
| Premature Withdrawal | After 3 years (with penalty) | Available (with penalty) | Available (with penalty) |
| Government Guarantee | Yes | No | No |
| Loan Against Deposit | Yes | Yes | Yes |
(FAQs)
1. Can I extend my RD account after 5 years?
Yes, you can extend your RD account for another 5 years in blocks of 5 years each.
2. What happens if I miss a monthly deposit?
A penalty of Rs. 1 for every Rs. 100 deposited will be charged for missed payments.
3. Can I withdraw my RD before maturity?
Yes, premature withdrawal is allowed after 3 years, but you will receive interest at a lower rate.
4. Is the interest earned taxable?
Yes, the interest earned on Post Office RD is taxable as per your income tax slab. However, there is no TDS deduction at the source.
Also Check: Post Office Scheme: By saving just Rs 250, you will get more than 24 lakh returns in this post office scheme
