Interest rate on RD in post office and what it earns

Interest rate on RD in post office, in rupees

The interest looks small next to the rate because each instalment is invested for a different time: the first for five years, the last for one month. On average your money is in for about two and a half years.

Why quarterly compounding matters

Every quarter, the interest earned is added to your balance and starts earning interest itself. That lifts the effective yearly yield from 6.7% to about 6.87%. It is the reason a ₹1,000 RD returns about ₹71,370 rather than a simple interest figure near ₹70,200.

The post office RD calculator uses this exact method.

RD interest rate in post office over the years

The 5 year RD rate fell to 5.8% in the low rate period, one of the lowest among small savings schemes. As bond yields rose, it was raised to 6.2%, then 6.5%, and then 6.7%, where it has stayed for many quarters. Older accounts keep their opening rate, so an RD opened at 5.8% still earns 5.8% until it matures.

Does the RD rate change if I open online

No. An RD opened through India Post internet banking or the mobile app earns exactly the same rate as one opened at the counter. The online route only saves the trip. The same is true for opening at a small branch office in a village; rates are national, and the passbook shows the identical figure.

Post office RD rate compared with other choices

PPF pays more and is tax free, but locks money for fifteen years. For a five year goal, the RD is the simpler fit. Bank RD rates at the largest public sector lender are on its RD rate card.

Tax on post office RD interest

RD interest is part of your income in each year it is earned. A saver in the 20% slab with a ₹5,000 RD gives up about a fifth of the ₹56,829 interest, keeping roughly ₹45,500. There is no deduction for RD deposits. TDS rules for post office deposits apply once interest crosses the threshold, which few RD savers reach.

Same rate, many search terms

Searchers phrase it many ways. Some type RD interest rate in post office. Others want the post office recurring deposit interest rate. Still others ask for the RD rate of interest in post office, the post office RD scheme interest rate, the interest rate on RD in post office or the post office RD account interest rate. Each points to the single 6.7% figure. The post office RD interest rate for 5 years is that same rate, as the RD has only a five year term. Post office me RD interest rate is the Hinglish version of the question.

For the account rules, missed payments and loans, see the main post office RD scheme guide.