Post Office vs Bank FD: Where will you get bumper profits on 5 years investment? Take a decision after looking at the interest rates

Best 5 Year FD Interest Rates 2026: The investment market has completely changed after the big cut in repo rate by 1.25% this year by the Reserve Bank of India (RBI). While major government and private banks have reduced their fixed deposit (FD) rates to between 5% to 7%, the post office is still standing strong.

Post Office Time Deposit (TD) scheme has emerged as the most attractive option for investors looking for a secure future and guaranteed returns. Let us know where your money will grow fastest over a period of 5 years and will prove helpful in saving tax.

Effect of repo rate cut on banks

As soon as the repo rate reduced, banks started cutting their interest rates, due to which the profits received by investors reduced. Most of the big private banks are offering maximum interest of up to 7% on 5 year FD. The situation of government banks is even worse, where interest rates have come down to between 5% to 6.40%.

Post Office’s strong 7.5% interest rate

The post office’s 5-year time deposit scheme is currently offering an annual interest of 7.5%, which is much higher than banks. Its biggest feature is quarterly compounding, which significantly increases the amount received on maturity. Besides, by investing in it you also get the benefit of tax exemption under Section 80C of Income Tax.

Complete mathematics of investment and earning

If you invest Rs 1,00,000 in the post office, then after 5 years you will get Rs 1,44,995, whereas in the bank this amount will be limited to a maximum of Rs 1,41,478. On a large investment of Rs 10 lakh, the post office gives you a maturity of Rs 14,49,948. This difference shows that in the long run the post office is giving thousands of rupees of additional profit compared to banks.

Condition of private and government banks

Among private banks, some names like IDFC First and DCB Bank are offering 7% interest, but biggies like HDFC and ICICI are limited to 6.40% to 6.60%. Among government banks, SBI is offering interest of 6.05% and PNB 6.25%. Banks definitely offer 0.50% additional interest for senior citizens, yet they seem to lag behind the post office.

Also read: These 10 big rules will change from today! From PAN-Aadhaar link to tax, you will be directly affected.

Final decision and right time

The Finance Ministry reviews post office rates every three months and the next review is due around December 31. In such a situation, investors have only the last few days of the year left to lock the high interest rate of 7.5%. If you want maximum returns and tax savings with risk-free investment, then Post Office will prove to be a great deal.