Is a Post Office Savings Account Safe?

If you want to know one thing about post office schemes, the first thing would be safety. Communication tools are on the rise every day. Today, do you know how many applications you use to talk to people? After reading this, you might have to make a mental count of it. But back in the 1800s, the post was the only way. But you know what the bigger deal is? The post office is still making it, all the way from the 1800s to 2021. The bigger picture here is the schemes it has to offer to the people. It is not without safety, security, and growth that all of these people put faith in the post office. 

Everything you Need to Know About the Post Office Savings Account

One of the Post Office’s schemes is the post office savings account. This post office savings scheme is available across the country. In addition, the post office savings account provides a fixed interest rate on the deposit amount. As a result, the post office saving scheme is appropriate for individuals wanting fixed returns on their assets. A savings account in the post office can be opened for as little as INR 20.

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This post office savings initiative is very popular in rural India. The rate of interest on post office savings accounts is set by the Central Government. Often, the rates are comparable to those of a bank savings account. The interest rate on the post office saving account is roughly 4%, and it is computed monthly. Furthermore, according to Income Tax regulations, interest payments of less than INR 50,000 per annum are tax-free in the hands of the depositor.

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Furthermore, depositors can withdraw their funds at any time. They must, however, keep a minimum amount of INR 50 in a general account and INR 500 if they have a cheque facility. Furthermore, the post office savings account is simply transferable from one post office to the next.

The post office schemes do not just stop here, so let us look at some of the most popular post office schemes of today.

  1. Post Office Monthly Income Scheme

POMIS or post office monthly income scheme is a low-risk investment scheme that provides depositors with a regular monthly income in the form of interest payments. POMIS has the support of the Indian government. Every quarter, interest rates are disclosed. The current interest rate is 6.60%. POMIS has a five-year lock-in duration. When the plan matures, the depositor has the option of withdrawing or reinvesting the entire sum.

  1. Post Office Recurring Deposit

POMIS has a minimum of INR 1,500 and a maximum of INR 4,50,000 per individual. However, the maximum ceiling for combined holding is INR 9,00,000. A POMIS account can also be transferred from one post office to another. Furthermore, after one year of account opening, this post office savings scheme allows for early withdrawals. However, these early withdrawals are subject to fines.

Investors can save on a monthly basis with a 5 Year Post Office Recurring Deposit (PORD) Account. The interest is compounded once a quarter. This post office small savings scheme offers 60 monthly installments. Individuals who want to save regularly through monthly installments should choose a Post Office RD. This scheme’s post office savings interest rate is 5.8% per year.

The lowest investment is INR 10, and there is no upper limit. All resident Indian nationals over the age of 18 can open a post office account. Minors under the age of 10 can also open and manage an account with the help of a guardian. In addition, parents or guardians can open an account on behalf of their minor children.

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  1. Post Office Time Deposit

One of the most popular post office savings plans is the Post Office Time Deposit (POTD) Account. The Finance Ministry determines interest rates every quarter. The rates are based on the yield on government securities and are spread over the yield on the government sector.

A minimum investment of INR 1,000 is required in a post office fixed deposit account. A TD account can be opened for any of the following terms: one year, two years, three years, or five years. Depositors can also choose to reinvest their interest. This option, however, is not accessible for a one-year TD. In addition, the interest can be redirected to a five-year recurring deposit arrangement.

Transferring time deposits from one post office to another is also possible. Also, if the depositor does not withdraw at maturity, the money will be reinvested for the duration of the deposit at the new relevant interest rates.

Why Should You Choose to Invest in the Post Office Investment Instruments?

You Have a Wide Range of Options: Investors can choose from a variety of investment choices at the post office. Each scheme has its own set of characteristics and benefits. As a result, they are allowing investors to select the finest solution that meets their investing needs.

It has Good Interest Rates: The post office plans have interest rates ranging from 4% to 7.60%. These investments are also risk-free because they are backed by the government. As a result, investors do not need to be concerned about their investments.

You Can Exempt from Taxes: The majority of post office investment plans are exempt from taxation under Section 80C. Schemes such as SCSS, SSY, and PPF are examples. In addition, for some plans, the interest is tax-free.

Easily Accessible: Post Office savings plans are simple to invest in and enroll in. The schemes have insufficient documentation and procedures. The investment opportunities are appropriate for both rural and urban investors. Furthermore, the Government of India supports these investment opportunities. As a result, they are secure.

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The Final Takeaway

The core aspect of having to invest in the post office savings account is knowing that your investment is growing safely with compounding interest. With multiple schemes to choose from, the question you ask yourself must not be if it is safe but if it is the best scheme for you to start investing in.