Post Office Schemes Outperform Bank FDs: Earn Up to 8.20% Interest in 2025 – Full List Inside
In 2025, several Post Office small savings schemes are offering significantly higher returns compared to bank fixed deposits (FDs). While most major banks are providing FD rates in the range of 6%–7%, Post Office schemes are delivering secure returns of 7% to 8.20% annually. Along with attractive interest rates, these schemes also come with government-backed security and tax benefits under the old tax regime. Here is a detailed look at the options that currently beat bank FD returns.
Why Post Office Schemes Are Gaining Popularity
With many leading banks cutting their FD interest rates recently, new FD investors are receiving lower returns than before. This trend is expected to continue, making small savings schemes a more appealing alternative. Post Office schemes stand out because:
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They offer guaranteed returns backed by the government.
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Many schemes come with tax benefits under the old regime.
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Interest rates are reviewed quarterly by the government.
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They provide stable and safe investment options for conservative investors.
Post Office Small Savings Schemes: Latest Interest Rates (1 October 2025 – 31 December 2025)
Below are the updated rates along with compounding frequency:
Time Deposit Schemes
| Instrument | Interest Rate | Compounding |
|---|---|---|
| 2-Year Time Deposit | 7.0% (₹10,000 earns ₹719 yearly) | Quarterly |
| 3-Year Time Deposit | 7.1% (₹10,000 earns ₹729 yearly) | Quarterly |
| 5-Year Time Deposit | 7.5% (₹10,000 earns ₹771 yearly) | Quarterly |
Senior Citizen Savings Scheme (SCSS)
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8.2% interest
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Quarterly compounding, interest paid quarterly
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Best option for retirees seeking predictable income
Monthly Income Account (MIS)
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7.4% interest
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Monthly payout (₹10,000 earns ₹62 per month)
National Savings Certificate (NSC)
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7.7% annually
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₹10,000 grows to ₹14,490 at maturity
Public Provident Fund (PPF)
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7.10% per year
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Long-term tax-saving instrument
Kisan Vikas Patra (KVP)
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7.5% interest
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Maturity in 115 months
Mahila Samman Savings Certificate
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7.5% interest
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₹10,000 becomes ₹11,602 at maturity
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Special scheme for women and girl children
Sukanya Samriddhi Yojana (SSY)
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8.20% interest
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Highest rate among small savings schemes
How Bank FDs Compare: Public Sector Bank Interest Rates
Most public sector banks offer FD rates between 6.5% and 6.75%, which are lower than many Post Office schemes.
| Bank | Interest Rate | Tenure |
|---|---|---|
| Bank of Baroda | 6.6% | 444 days |
| Bank of India | 6.6% | 777 days |
| Bank of Maharashtra | 6.65% | 500 days |
| Canara Bank | 6.5% | 444 days |
| Central Bank of India | 6.75% | 2222/3333 days |
| Indian Bank | 6.6% | 444 days |
| Punjab National Bank | 6.6% | 390 days |
| State Bank of India | 6.6% | 444 days (Amrit Vrishti) |
| Union Bank of India | 6.6% | 3 years |
Private Bank FD Rates: Slightly Higher but Still Below Post Office Rates
Some private banks offer relatively better FD rates, but they still fall short of schemes like SCSS, NSC, or SSY.
| Bank | Interest Rate | Tenure |
|---|---|---|
| Axis Bank | 6.6% | 15 months – 10 years |
| Bandhan Bank | 7.2% | 2–3 years |
| DCB Bank | 7.2% | 37–38 months |
| IDFC FIRST Bank | 7% | 450 days – 5 years |
| IndusInd Bank | 7% | 555 days |
| RBL Bank | 7.2% | 18 months – 3 years |
| YES Bank | 7% | 18 months – 5 years |
Even the highest FD rates (7%–7.2%) remain lower than small savings options like:
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SCSS (8.2%)
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Sukanya Samriddhi Yojana (8.2%)
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NSC (7.7%)
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Mahila Samman Certificate (7.5%)
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KVP and 5-year TD (7.5%)
Conclusion: Where Should You Invest?
If your primary goal is safety, guaranteed returns, and higher interest, Post Office schemes outperform bank FD offerings in 2025.
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Senior Citizens: SCSS (8.2%) offers the best secured income.
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Parents of Girl Child: SSY (8.2%) is unmatched for long-term growth.
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Women Investors: Mahila Samman Certificate (7.5%) is a reliable short-term option.
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General Investors: NSC (7.7%), KVP (7.5%), or 5-year TD (7.5%) provide stable returns.
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Long-term Tax Savers: PPF at 7.1% remains a trusted instrument.
Post Office small savings schemes continue to lead the market with higher yields, government backing, and strong stability—making them a superior choice for conservative and long-term investors in 2025.
