Fixed Deposits (FDs), in the Indian context especially, are quite popular as an investment instrument simply because they are institutionalised, provide safety and better than average returns. In our country, you can make an FD with commercial banks, Non-Banking Financial Companies (NBFCs) and Post Offices. But when choosing one of the two- Post Office FDs or Corporate FDs, certain variables are of great importance.
The Comparison
Interest Rates:
The interest rates for a Post Office FD range from 5.5% to 5.7% depending on different time periods but they don’t vary as per age. In simpler terms, the rate remains the same for senior citizens too; unlike the policy followed by banks, etc.
Among the reputed corporate fixed deposits, the average rate of return range is from 4.5-5.75%. However, Bajaj Finance does better than the average. It provides a general rate of 6.50% subject to further increments with certain conditions.
Therefore, an accurate comparison suggests that Bajaj Finance outdoes the average post office FD by at least 1% or even more.
Calculation:
For post office FDs, no official calculator is available. But for corporate FDs, like Bajaj Finance, the Bajaj Online FD Calculator is accessible. It requires you to input tenor, interest rate and amounts so as to predict cumulative interest and maturity value. In fact, it is also used to ascertain returns from a Post office FD.
Loan against FD:
Post office Fixed Deposits follow the traditional system hence offering no loan against FDs. But the very possibility of breaking an FD is what deters most people from opting for it in the first place. Therefore, at Bajaj depositors are allowed to take a loan against the FD (post the initial lock-in period of 3 months) when they need to make emergency withdrawals. The only condition is that the loan value cannot exceed 75% of the FD value.
Application Process:
For Post office FDs, you can either use the mobile banking method via the Indian Post Banking Application on play store or the offline method by going to a branch; to open a Post Office Term Deposit or FD.
At Bajaj, the offline process involves downloading and printing forms from the websites or procuring them at branches in order to physically submit them to an executive. However, there is an online service which makes your entire FD online and allows you to complete each and every formality from your device screen rather than stepping out of the house.
Senior Citizens:
Let alone providing additional interest rates, post office FDs don’t have any special services for Senior Citizens. However, for corporate FDs like Bajaj Finance the senior citizen customers are given a 0.25% hike from regular interest rates and allowed some additional services.
Benefits
Benefits to Pravasi Bhartiyas (NRIs):
For Non-Residential Indians (NRIs) and others of the same category with an NRO account, tenors between 12 and 36 months are given as a choice. The interest rates are the same for them including the additional benefits given to Senior Citizens.
Systematic Plan for Depositors:
The Systematic Deposit Plans (SDPs) launched by Bajaj allow people to make deposits on regular intervals, keeping in mind the erratic availability of funds. In this, the tenor still remains between 12 and 60 months. Depositors have to choose between 6 to 48, for the number of deposits they’d make in a month under their SDPs at Bajaj FD.
High Credibility and Stability:
Bajaj Finance is a safe option because it has been accredited with the highest ratings of CRISIL’s FAAA and ICRA’s MAAA, ensuring your money and funds are safe.
Smaller Minimum Deposit:
With a cap of only Rs 25,000, you can start investing in FDs. At the early stage without being forced to accumulate a larger set of funds.
Auto-renewal:
The general perception about auto-renewals is a sense of hesitation and suspicion. However, Bajaj gives you the option to opt for an auto-renewal to save you the time and effort of manually filling the renewal forms repeatedly. It is completely voluntary and you’re still in control. The only thing that is eliminated is a waste of time and effort on your end.
Hence, when comparing Post office and Corporate FDs like Bajaj Finance. It is the latter that emerges as the best option.
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