If you have been looking to earn some extra benefits while saving your hard-earned money, then depositing in a post office savings account could be a very good option. These accounts come with dual benefits and apart from offering higher interest rates than banks, depositors are eligible for tax exemption on the interest of up to Rs 3,500 in a financial year. In case of a joint account, the exemption goes up to Rs 7,000.
In recent times, we have witnessed a decline in the interest offered on savings account.The interest rate offered by Indian’s largest public sector bank State Bank of India has slumped down to 2.7 per cent annually. However, post office saving accounts are still offering a 4 per cent return.
Anyone with valid KYC documents can open a saving account at the nearest post office with an initial deposit as low as Rs 500. The interest on the post office saving account is calculated on the minimum balance between the 10th of every month and the last day of the month.
However, if the customer fails to raise the minimum account balance to Rs 500 at the end of the financial year, the post office will deduct Rs 100 account maintenance fee. If the balance drops down to nil, the post office saving account shall be automatically closed.
Small saving instruments such as the post office saving account are very popular among many retail investors as it offers a higher return than the general bank saving account. Post office saving scheme is nearly risk-free and ideal for investors who don’t wish to put their money at risk in hope of better return,
The interest rates offered on the post office saving account is reviewed quarterly by the government and can be changed depending upon the market conditions. For the July to September quarter, the government has kept the interest rate unchanged.
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