Bank FD or post office deposit? The higher interest comes with a catch

When it comes to fixed deposits, most people tend to go with the bank they already use. But a recent comparison shared by entrepreneur Prafull Billore has brought a simple question into focus: is it worth looking beyond a bank FD for a slightly higher interest rate?

In an X post, Billore, CEO of MBA Chai Wala Group, compared the Post Office's 1-year Time Deposit with SBI's 1-year fixed deposit and also highlighted the higher return offered by the Senior Citizens Savings Scheme (SCSS).

His larger point was that investors often overlook small-savings schemes even when they offer better interest rates. However, the trade-off is important: higher interest may come with lower liquidity or a longer lock-in.POST OFFICE OFFERS 6.90% FOR ONE YEAR

For the quarter ending September 30, 2026, the Post Office 1-year Time Deposit offers 6.90% per annum.

The rate is higher than what SBI currently offers on a comparable one-year retail domestic fixed deposit for the general public.

SBI offers 6.25% per annum on deposits below 3 crore for a tenure of one year to less than two years. For senior citizens, the rate is 6.75% per annum.

This means the Post Office offers a 0.65 percentage point higher rate than SBI for regular customers. For senior citizens, the difference is much smaller at 0.15 percentage point.

The bigger rate difference comes in the case of the Senior Citizens Savings Scheme (SCSS).

SCSS currently offers an attractive 8.2% per annum. But there is an important catch: it is not a one-year investment product.

The official lock-in period for SCSS is five years. This makes it unsuitable for someone who may need the money within a short period.

For a senior citizen, therefore, the choice is not simply about whether 8.2% is better than an FD rate. The real question is whether the investor is comfortable keeping the money invested for the longer period and giving up some liquidity.HIGHER RETURNS VS EASY ACCESS

This is where investors need to look beyond the interest rate.

A Post Office Time Deposit can offer a higher rate than a comparable SBI FD, but investors should still consider when they may need the money. A bank FD may be more convenient for someone who values easy access and already manages most of their finances through a bank.

SCSS, meanwhile, may suit senior citizens looking for a relatively high interest rate on money they can set aside for the longer term.

Billore also advised keeping only money that may be required immediately in liquid investments and considering Post Office schemes for the rest.

For investors, the best option is therefore not necessarily the one with the highest headline rate. The tenure, liquidity needs and withdrawal rules should be considered alongside the return before making a decision.- EndsPublished By: Jasmine anandPublished On: Sep 12, 2026 12:11 IST