The Post Office has made a major update to its savings scheme, reducing interest rates on Time Deposit (TD) accounts. This change comes after a long gap, even though several leading banks had already lowered FD interest rates following cuts in the repo rate by the Reserve Bank of India (RBI).
Let us see how this affects savers like you.
Interest Rates Cut on 1, 2, and 3-Year TDs
Prior to this, the Post Office had been providing:
6.9% for 1-year TD
7.0% for 2-year TD
7.1% for 3-year TD
7.5% for 5-year TD
Now, the revised version has brought down the interest rate for 1-year, 2-year, and 3-year TDs to a common 6.9%. But the 5-year Time Deposit will retain the 7.5%, i.e., no cut.
This revision may slightly reduce your returns if you’re planning to lock your money for 2 or 3 years.
Why the Cut Happened
The RBI had already cut the repo rate by 1.00% in 2025 in three phases:-
0.25% in February
0.25% in April
0.50% in June
While most banks reacted quickly and adjusted their fixed deposit rates, the Post Office waited. But now, it’s finally aligned with the broader interest rate trend.
Post Office Still Competes Better With Banks
Even post the rate cut, Post Office TDs continue to outperform most bank FDs. Here’s a side-by-side comparison with SBI:
SBI 1-year FD: 6.25% – 6.75%
SBI 2-year FD: 6.45% – 6.95%
SBI 3-year FD: 6.30% – 6.80%
Senior citizens earn 0.50% extra on bank FDs, but the Post Office gives the same rate of interest to everyone, regardless of age.
Is It the Right Time to Invest in Post Office TD?
If you’re looking for safe savings options and stable returns, the Post Office Time Deposit is still a solid choice especially the 5-year plan. It beats many bank rates and offers government-backed security.
Disclaimer: This is for information only. Please consult a financial advisor before investing as we are not responsible for any losses.
.