Post Office Time Deposit (TD) Account: Interest Rate, Maturity Period, Other Details

From January 1, investment in a time deposit account in a post office fetches 7 per cent return in a lock-in period of 1-3 years. In other words, time deposits - or term deposits - of a maturity period of one year, two years and three years pay a 7 per cent interest in the post office. For the quarter ending March 31, money in one-year, two-year and three-year TD accounts will fetch interest at the rate of 7 per cent, according to India Post's website - indiapost.gov.in. (Also read: Government announces small savings scheme interest rates for March quarter)

Here are five things to know about the time deposit and other small savings schemes:

1. A time deposit or TD account can be opened in four options of maturity period: one-year, two-year, three-year and five-year. Interest on the TD account is compounded on a quarterly basis.

2. Of these, one-year and two-year time deposit accounts fetched interest at the rates of 6.9 per cent and 7.2 per cent in the October-December quarter respectively. A TD account of five-year maturity continues to yield interest at 7.8 per cent, according to the post office website.

3. The government revises the interest rates applicable to small savings schemes on a quarterly basis. The finance ministry had last year increased interest rates applicable to small savings schemes by up to 0.4 per cent for the October-December quarter.

4. For the quarter ending March 31, the government has only changed the interest rates applicable to one-year and three-year time deposits, while keeping those on other small savings schemes unchanged.

5. The government offers nine types of small savings schemes, such as Time Deposit, Savings Account, Recurring Deposit, Senior Citizen Savings Scheme (SCSS), Public Provident Fund and National Savings Certificate (NSC).